Revenue Canada Lien Basics – How Are Home Liens Paid Out?

revenue canada tax lien refinance

What Can You Do If You’ve Got a Revenue Canada Lien?

A tax lien is never welcome in your home. However, if you’ve accumulated a lot of Canada Revenue debt and haven’t been able to pay for a long time – a Revenue Canada lien may be unavoidable. While the government prefers to avoid taking legal action, if a debt is ignored they will act to get a tax payer’s attention. Unfortunately for homeowners, one of the collections actions available to Canada Revenue Agency (CRA), is to register on title and stake a claim to your real property.

A Canada Revenue Lien is only registered when a tax debtor fails to pay their bill. A tax debt can have a big impact if left alone. If you do nothing about your lien and your primary mortgage becomes due for renewal you may have problems. Your existing mortgage lender or bank may not want to renew your mortgage if they see that CRA has registered a lien against your home.

We recommend finding a way to pay out a Revenue Canada Lien as soon as possible. Fortunately, we don’t just recommend it – we can help you do it. Equity is the key, it’s likely you’ve got some because CRA would not have registered a legal claim against title. CRA must know that you have equity up for grabs.

How Do You Pay Out a Revenue Canada Lien? 

Morty the Mortgage
Morty the Mortgage Broker

While there are a few ways you can pay out a Revenue Canada lien, choosing the best option will depend greatly on your circumstances. Your current income and available credit and savings will tell you if it is possible to work out a payment arrangement that will satisfy CRA so that they will lift the lien.

If you’ve got enough income or savings to make it work it can be a win-win. Sure, you’ll pay interest on your balance but you can work directly with the government to service your debt. Chances are, if you could do this you already would have tried it and you wouldn’t have found this article. 

Your alternatives to working out a payment arrangement directly with CRA by yourself include the following:

  • Liquidate an asset such as an RRSP.
  • Borrow from family/friends.
  • Sell your home.
  • Refinancing.

Of all of the available options, refinancing gives you the most control, preserves your retirement nest egg, allows you to keep your home and avoids undesirable conversations with family members. Remember, if you don’t do anything about your tax lien the government could even consider forcing the sale of your home to service their debt.

Refinancing to Remove and Pay Out a Revenue Canada Lien

The aforementioned options are not ideal for most people. Who wants to ask their loved ones for money? Why would you sell your home if you like where you live and have worked hard to become a homeowner. Borrowing from your future self isn’t any better, you don’t want to come up short when it’s time to retire.

Taking money that is meant to help you retire is counter-intuitive. You may not even have time to pay back what you withdraw before retirement.

Borrowing from your future self is not a good solution if you don’t have a lot of working years left. Refinancing may ultimately be one of your best options. Refinancing your home is one of the simplest solutions available to you and an essential option for those who need it most. Even if you’ve got bad credit or have lost a job recently, if there the equity in your home we can help you find a lender who will help you clear up the debt

revenue canada tax lienShould You Ask Your Bank First?

We always recommend using a broker to get the best interest rate. Good credit or bad credit, high, low or no income – a broker can help you.

While traditional banks do not allow consumers to refinance Revenue Canada liens, there are a multitude of lenders who will. The benefit of dealing with a mortgage broker is that we know who to approach. We know which lenders will allow you to payout these types of liens.

Fortunately, a large number of lenders will allow for a lien payout and they also offer a number of products to choose from. For example, if you will face large penalties to break your first mortgage.

Our lenders can offer you a secured line of credit or a second mortgage that your bank isn’t likely to recommend. By preserving your existing first mortgage rather than paying it out early, we can avoid unnecessary fees. We can help you circumvent the “stress tests” and strict rules that major banks must follow. You will still get rid of your Revenue Canada Lien but your first mortgage will remain intact.  

Pay the Taxes, the Lien will be Released

If you owe money and can’t negotiate an installment agreement or offer a compromise for the full amount – we can help you deal with your income taxes.  Once a lien attaches to your property it gets harder to work with CRA. In these cases, a home equity loan or second mortgage really can be the best solution. A clean start, free of debt for income or excise taxes (for business owners) is possible.

You could always consider a bankruptcy or look at what is involved to file a consumer proposal, but if you have equity you can stop a lien without damaging your credit score. Why put yourself through an unnecessary insolvency event when you don’t need to. Your credit (and likely self-esteem) will suffer and it may be expensive to go bankrupt. Bankruptcy costs increase if you have assets such as home equity.

Working with TurnedAway to Stop a Lien

Our experts have many years of experience helping people like you. If you have an unwanted lien registered against your property, we can help you find a solution. 

Trust a mortgage broker to shop around for the best rate and don’t worry about your credit score or income. At TurnedAway, we are well versed in the art of equity-based lending. We don’t disqualify for bad credit or unpaid bills. Beyond this, a bankruptcy typically cannot remove a lien because a secured debt is treated separate from your credit cards and non-mortgage bank loans.

We don’t rely heavily on your credit report, we look at your equity. We’ll help you avoid a publicly recorded mark against your credit. If you’ve got enough equity, we can get you a fresh start. If you have a Revenue Canada lien on a home, commercial property or even a piece of vacant land – we offer free consultations to get you back on track.

Contact us today to stop a federal tax lien owed to CRA.