How to Buy a House by Paying Back Taxes

While everyone wants the house of their dreams, few have the means to actually buy it. Although taking loans is a popular option, it is not the smartest. Read on to learn how to buy a house by paying back taxes.


Back taxes are taxes that you owe from an earlier period or year. You become liable to pay back taxes when you underpay taxes. You also become liable to pay back taxes when you fail to report your full or partial taxable income. These can happen intentionally or accidentally.

Although most individuals miss their payments, underpay, or under report their taxable income by accident, some people do so as part of a strategy Tax Expert . The strategy is to defer paying taxes for a certain period of time in order to purchase things such as a house, which they would normally not be able to afford. Once the purchase is made, they then approach the IRS and plead for a lenient compromise settlement. Let us understand the process.

Let’s say that the quantum of your salary is such that you can’t afford to buy a house, due to taxation. What you do is you defer your tax payment for a few years; let’s say five, for example. You are able to save a substantial amount of tax money in this period, and you proceed to purchase a house therewith. This is a house that you otherwise would never have been able to afford.

Once your house is safely in your custody, you must now deal with the issue of the back taxes. You will be surprised how lenient the IRS can be if you are a first time offender with a clean past record. The IRS does not always extract the full back tax amount plus fines from first time offenders.

With the help of a good tax expert, you can present a solid case for back tax leniency to the IRS. First time offenders often are required to pay only ten to thirty per cent of the total amount they owe, thereby saving them a big chunk of money. You can benefit immensely from this if you plan your strategy well. And best of all, it is legal, as you do arrive at a settlement with the tax authorities and pay back the amount they ask for.

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