Can the IRS Take My Home? What Every Expat Taxpayer Should Know

It’s normal to worry about what might happen next if you fall behind on taxes. Some people may fear losing their wages or bank accounts. However, the biggest concern we often hear from clients is, “Can the IRS take my home?”

Short answer, yes. The IRS can seize and sell your home to collect unpaid taxes. However, it rarely happens. It serves as the IRS’s last resort when all other options have failed.

Understanding when and how the IRS can take your home and, more importantly, how to prevent it, can help you protect your most valuable asset.

What Gives the IRS the Power to Take a Home?

The IRS’s authority to seize property comes from Internal Revenue Code (IRC) Section 6331. It gives the agency power to take a taxpayer’s property to collect unpaid taxes. There are two main methods the IRS can use to pursue a taxpayer’s property: a tax lien and a tax levy.

A tax lien gives the IRS a legal claim to your property. It doesn’t take your home away. However, it secures the government’s right to collect when you sell, refinance, or transfer ownership.

A tax levy, however, is more serious. It permits the IRS to take and sell your assets to satisfy your debt.

Even then, the IRS cannot seize your primary residence without court approval. The agency must also prove that no other reasonable collection alternative exists.

When Does the IRS Consider Taking a Home?

The IRS views seizing a taxpayer’s primary residence as a last resort. It typically happens only when you:

• Owe a large or long-overdue tax balance
• Ignored multiple IRS notices and failed to respond
• Refused to enter into a payment plan or cooperate with the IRS
• Engaged in tax evasion, payroll tax violations, or fraud
• Own a house with enough equity to pay off all or part of your debt

In most cases, the IRS starts with smaller collection actions long before considering taking your home.

If you respond to IRS letters and make payment arrangements, seizure is usually not a concern.

What Notices Will You Receive Before the IRS Takes Your Home?

The agency will never take your home without first giving a warning. It will send several letters before the seizure happens, including:

1. Notice CP14 – You’ll first receive a letter showing how much you owe, including penalties and interest.
2. Final Notice of Intent to Levy (Letter 1058 or LT11) – This serves as your warning that the IRS will seize your property if you don’t act within 30 days.
3. Notice of Federal Tax Lien – The IRS may file a public lien to secure its interest in your property.
4. Court Approval Request – For primary residences, the IRS must petition a federal court for authorization before taking your home.

These steps often take months or even years. That means you have multiple opportunities to respond, set up payments, or appeal before any seizure occurs.

How the IRS Home Seizure Process Works

If the IRS decides to take your home, it follows a strict process based on Internal Revenue Code Section 6334(e)(1). Here’s how it works:

1. Court Authorization

The IRS must request approval from a U.S. District Court judge or magistrate before seizing your principal residence. The court reviews whether the IRS followed all procedures and if no reasonable alternative exists.

2. Fair Market Valuation

After approval, the IRS determines your home’s fair market value. It then calculates a minimum bid, typically 80% of that value, to ensure the property won’t sell for far less than its worth.

3. Notice of Sale

The IRS informs you in writing and posts public notices in newspapers or online. They do this at least 10 days before the auction.

4. Auction Sale

The IRS holds a public auction to sell your home to the highest bidder.

5. Distribution of Proceeds

Funds from the sale are distributed to creditors based on their priority. First, mortgage lenders are paid. Next, the IRS gets its share, followed by any junior lienholders. If there are funds left, the IRS sends you the remaining balance.

What Happens After the IRS Takes Your Home?

If your home has already been sold, you may still have rights. The IRS allows a 180-day redemption period. During this time, you can buy back the home by paying the auction price plus 20% interest.

You can also ask for a seizure release if you:

• Pay your tax debt in full.
• Enter an installment agreement that settles the debt.
• Show that the seizure causes significant financial hardship.
• Prove that the IRS did not follow the correct legal steps.

If the IRS took your property by mistake, for example, if the home belonged to someone else, you can file a claim for wrongful levy under IRC Section 7426.

How to Prevent the IRS From Taking Your Home

The best way to prevent the IRS from taking your home is to act before collection efforts get serious. The IRS typically prefers cooperation over confrontation.

1. Pay Your Tax Debt in Full

If you can pay your balance immediately, do so. Full payment stops all collection activity and removes the risk of seizure.

2. Set Up an Installment Agreement

An installment agreement lets you pay your debt in monthly payments. Once it’s approved, the IRS stops active collection, including levies and seizures.

3. Apply for an Offer in Compromise (OIC)

An OIC allows you to settle your tax debt for less than you owe if paying in full would cause hardship. The IRS checks your income, assets (including home equity), and ability to pay before approving.

4. Request Currently Not Collectible (CNC) Status

If you can’t afford any payments, you can request CNC status, which temporarily stops collection efforts. The IRS won’t seize property while your account is marked uncollectible.

5. File an Appeal

If you get a Notice of Intent to Levy, you have 30 days to ask for a Collection Due Process (CDP) hearing. During this time, the IRS can’t seize your home.

6. Contact a Tax Professional

A tax attorney or enrolled agent can negotiate directly with the IRS and help you explore all available relief programs.

Can the IRS Take Jointly Owned or Mortgaged Homes?

Yes, but how depends on the ownership structure.

• Joint Tenancy: The IRS can seize the home, but must compensate other owners who don’t owe the debt.
• Tenancy in Common: The IRS can sell the property and pay each owner their share of the proceeds.
• Tenancy by the Entirety (Married Couples): If both spouses owe taxes, the IRS can seize the entire property. If only one spouse owes, the IRS can claim only that spouse’s share.

If the home has a mortgage, the lender has first claim to the proceeds. The IRS receives payment only after the mortgage balance and earlier liens are satisfied.

Can the IRS Seize My Home in Another Country?

The answer depends on where you live and how your host country cooperates with U.S. tax authorities.

The IRS can legally pursue your foreign assets if you owe federal taxes. However, it can’t directly seize property outside the United States without help from the local government. That cooperation usually happens through tax treaties or mutual collection agreements between countries.

Some nations assist the IRS in collecting unpaid taxes, while others don’t recognize U.S. tax liens or levies on their soil. Still, the agency can file a federal tax lien in the United States that attaches to all your worldwide property. This lien can cause issues if you sell your home, apply for a mortgage, or transfer funds back to the U.S.

Other Ways the IRS Can Collect From Expats

Even without direct seizure authority overseas, the IRS has several ways to collect from Americans abroad. It can:

• Levy U.S.-based bank accounts or income sources tied to your name.
• Offset future tax refunds to reduce your unpaid balance.
• Use FATCA (Foreign Account Tax Compliance Act) to identify your foreign financial accounts.
• Revoke or deny your U.S. passport if your tax debt exceeds $62,000.

If you own property abroad and owe U.S. taxes, it’s important to act early. You may still qualify for a payment plan or other relief options while living overseas. Working with a team that understands expat tax laws, such as Tax Samaritan, can help you protect your home abroad and stay compliant with the IRS.

Contact Tax Samaritan today to get expert help with your U.S. tax debt and keep your assets safe wherever you live.

Are Any Homes or Assets Exempt from IRS Seizure?

Some assets are legally exempt from seizure, meaning the IRS can’t touch them even if you owe taxes. These include:

• Your primary home if your debt is under $5,000.
• Personal property, such as clothing, furniture, and schoolbooks.
• Tools needed for work or trade.
• Disability and unemployment benefits.
• Workers’ compensation and certain pensions.
• Minimal weekly income required for living expenses.

Additionally, the IRS cannot seize your home if doing so would leave you homeless or unable to meet basic living needs.

How Common Are IRS Home Seizures?

Actual home seizures are extremely rare.

According to IRS data, the agency issues hundreds of thousands of levy notices each year but seizes only a few hundred physical assets, such as homes, vehicles, and business equipment.

The IRS usually prefers to collect through bank levies, wage garnishments, and refund offsets because these methods are quicker and less expensive. Seizing a primary residence can lead to public relations issues and potential hardships that the agency wants to avoid.

That said, ignoring the IRS long enough can still lead to liens and levies that impact your credit and financial stability.

What To Do If You’re Facing an IRS Levy

Follow these steps immediately if you received a Notice of Intent to Levy:

1. Don’t ignore the notice. Contact the IRS or your representative within the 30-day window.
   
2. Request an appeal. You can file Form 12153 to request a CDP hearing.
   
3. Submit documentation. Provide proof of income, expenses, and hardship if applicable.
   
4. Explore payment options. Apply for an installment plan or an Offer in Compromise.
   
5. Seek professional help. A tax professional can handle communication and negotiate relief.

Final Thoughts

So, can the IRS take your home? Legally, yes. But in practice, it’s a rare and extreme measure that happens only after years of unresolved debt and ignored notices.

Even after receiving a levy notice, you can still protect your home if you act early. The IRS prefers to work with taxpayers who show good faith and willingness to pay.

If you owe back taxes or fear losing your home, don’t wait until it’s too late. Contact Tax Samaritan today for a free 30-minute consultation. We’ll help you evaluate your options, communicate with the IRS, and secure a plan that protects your home and peace of mind.