In today’s volatile real estate market, there is absolutely no doubt that the Taxman will register a tax lien against your house. It’s your biggest asset and the surest way for him to secure your tax debt and get paid.
If you stay calm and act reasonably, there are ways to broker a deal and protect your house.
Here are the answers to common questions about tax liens.
How do I know if there is a lien registered against my home?
CRA process usually advises you by letter that a Certificate has been registered in Federal Court for the arrears owing. This is usually the opening move in a plan to register a lien against your home and/or real estate property. If and when the property lien is registered, CRA typically advises you by letter. In some cases, though, you may not discover there’s a lien until you try to sell your home, or refinance the home with a new or bigger mortgage.
Does a tax lien mean I have lost title to my home?
No. However, the lien gives the CRA a legal claim on your home.
Does a lien mean the CRA will take my home?
Not immediately. A lien is registered as security against your tax debt. The CRA will not take possession of your home and sell it the very next day. But if your tax balance remains unpaid, the CRA may, at any time, register a Writ of Seizure and Sale, which is very serious enforcement action. The Write of Seizure and Sale gives the CRA the legal authority to authorize the Sheriff to seize your home and sell it.
Does this happen?
Yes. How quickly is often a factor of market conditions. When real estate markets are booming, the CRA may be happy nurturing its investment in the growing value of your home. But when markets start to cool, the CRA may be prompted to protect its interest and move in to get the most it can from a forced sale of your home. In today’s market, the danger of CRA foreclosure on a lien is higher.
What if there are other people on title besides me?
CRA can only realize proceeds from your share of the equity in the property. The CRA cannot seize your wife’s, or any else’s equity.
However, if you have transferred your equity (title) to someone else without receiving payment eqaul to the fair market value of the share of your equity at the time of the transfer, CRA may consider assessing that someone else for all or part of your tax arrears.
Can I go bankrupt to get rid of the tax lien?
Filing for bankruptcy, or filing a consumer proposal, does not automatically discharge a lien against your property. Typically, insolvency trustees don’t take the time and effort to negotiate with the Canada Revenue Agency to settle the CRA’s interest in your home. So the lien survives the insolvency filing and continues to accrue interest.
For that reason, it’s safest to deal with DioGuardi.
DioGuardi can broker a deal to settle your tax debt and get the lien removed.