Intuit Academy Tax Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

A tax lien is a legal claim placed on a property by a government entity when the property owner fails to pay taxes owed. This lien serves as a public record indicating that the government has a right to the property until the taxes are paid, effectively securing the debt against the asset.

The presence of a tax lien can prevent the sale or transfer of the property because potential buyers usually require clear title before purchasing real estate. A tax lien indicates that there are unpaid obligations tied to the property, which can lead to complications during the closing process. Buyers may be hesitant to proceed with a purchase if there is a risk that they will inherit tax liabilities along with the property. Additionally, lenders typically will not finance a property that has a tax lien, further hindering the ability of the owner to sell the property freely.

In contrast, the other options do not accurately capture the impact of a tax lien. For instance, asserting that a tax lien has no effect on ownership overlooks the significant legal and financial implications tied to such liens. Similarly, the notion that it allows the owner to sell the property freely ignores the restrictions imposed by the lien. Finally, the claim that a tax lien increases the market value of a property is inaccurate since tax liens tend to deter potential buyers