IRS Foreclosure Redemption Likelihood? ~$1.3M Equity, ~$2M+ Federal Tax Liens

[John Smith]

Hello Bigger Pockets Forum,

Looking for thoughts and feedback on the probability of the IRS exercising their redemption rights (during the 120-day period) to redeem a foreclosing property which has ~$1-1.3M of equity and ~$2M+ of IRS Federal Tax Liens levied against it? (details on scenario below)

From research on Bigger Pockets and other sources, it sounds as if the IRS exercising their redemption rights is an extremely low probability but this circumstance seems unique given the large amount the IRS is owed via the tax liens and the substantial equity in the home.

Overview:

- The senior lienholder (lender) – first deed of trust – is foreclosing on the property (no HOA or property tax liens) and the IRS and other judgements (state income tax, credit cards) are junior to the senior lienholder (deed of trust)

   - Lender Bid for Auction: ~$550-600k

   - Market Value of Property: ~$1.6-1.9M

   - IRS Federal Tax Liens: ~$2M+

   - Other Liens (state income tax, credit cards): ~$90k+ (a couple are senior to IRS’ Federal Tax Liens but all are junior to lender who is the senior foreclosing lienholder)

With the amount the IRS is owed I’d imagine this is a higher visibility tax lien case for them, and may in turn have a higher probability of redemption but would welcome thoughts and feedback on the likelihood of the IRS actually redeeming?

@Jay Hinrichs, @Tom Gimer - thoughts?