Refinance Tax Debt

To understand the pressures of tax debt and what can be done, let's look at the following example.

Paul is an entrepreneurial businessman who runs his own company selling wholesale tractor equipment from a rented office space. Due to the rapid growth of his business, Paul planned to expand, and started to consider his professional and personal future possibilities. Unfortunately for Paul, he made a few crucial mistakes in his planning.

By underestimating the importance of his tax responsibilities, Paul eventually accrued a substantial tax debt in failing to pay his ongoing tax dues for the business. Taxation officers soon became more interested in his business and his tax debts.

It got to the point where Paul had to think about refinancing his mortgage in order to pay off these debts, however due to his financial situation many traditional lenders would not accept his loan applications. As the amount Paul needed to borrow was more than 80% of the value of his home (or  above 80% Loan to Value Ratio, (LVR)), the lender's mortgage insurers also had issues with Paul's loan application.

Thankfully though there are specialist who deal with supporting small businesses and refinancing for tax debts. There is a range of lenders able to provide loan packages for scenarios just like Paul's. In contacting a specialist refinancing company, Paul's case was put to a number of specialist lenders.

A positive outcome for Paul eventually involved increasing his existing mortgage (from $280,000 to $350,000), which was 90% of the Loan to Value Ratio for his property, allowing him to pay off his tax debts. This was a possibility as the specialist refinancing company was able to find Paul a specialist lender who did not require mortgage insurance and were experienced in dealing with cases just like Paul's.

It's normal to be stressed out about tax debt but there are ways to get out of the tax debt trap.