How to Purchase a Tax Lien Property From the IRS
When a U.S. taxpayer fails to pay federal income taxes, the IRS is entitled to place a tax lien on all of the taxpayer's property (including both real estate and personal property). Since the property is useless to the IRS unless it can be converted into cash, the IRS will sometimes auction a taxpayer's property in order to satisfy the tax debt. These auctions are open to the general public, and many bargains can be found.
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Instructions
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Navigate to the IRS Real and Personal Property Sales section of the U.S. Treasury website. This site lists property that is being sold for non-payment of back taxes, and includes real estate, aircraft, automobiles, industrial and commercial property, intangible property such as financial instruments, and many other types of property.
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Select the type of property on which you wish to bid (using the U.S. Treasury website), and click on the link that will send you to the web page that lists these properties. This page will list the date and time of the auction, the location of the auction, and a description of the property. It will also list the amount of any minimum bid.
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Check the encumbrances listed against the property (available on the U.S. Treasury website). This will help you determine the true value of the property, because all encumbrances except the IRS tax lien will remain on the property after you purchase it.
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Collect cash or a certified check in the amount of the minimum bid on the property you are interested in purchasing. Since you will have to pay the full amount of any winning bid immediately, collect enough cash (or additional certified checks in smaller denominations) to pay for any increase in your bid amount. Any leftover certified checks can be refunded by the issuer.
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Attend the auction in person, bid on the property, pay the amount of your bid, and arrange for delivery of the property (if it is not real estate).
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Tips & Warnings
Many federal tax auctions allow bidding by mail. Although this offers added convenience, without attending the auction in person you will have no way of knowing what others have bid and will not be able to raise your bid.
Since all property is sold "as is" with no guarantees, including real estate, it would still be a good idea to have a title search performed on any real estate you intend to purchase, in case the list of encumbrances provided by the U.S. Treasury is incomplete. A real estate title search will also tell you if there are any competing claims to ownership of the property.
