Can I get a home loan with tax debt?
Short answer
Yes, often, but it depends on whether the debt is managed. Major banks typically want overdue ATO debt cleared or under a kept payment plan before they approve a home loan. Specialist lenders commonly lend where the loan pays the ATO out at settlement. What sinks an application is undisclosed, unmanaged arrears. The ATO debt and home loans guide covers the full picture.
How a lender finds out about ATO debt
Lenders do not have a live feed into your ATO account, but they usually find out anyway. The application form asks about all liabilities, and a false answer is a serious problem later. Bank statements show payments to the ATO, or the absence of them. Self-employed applicants are commonly asked for an ATO integrated client account statement and recent notices of assessment, which show exactly what is owed.
For business debts there is one more path. The ATO can report a business debt to credit bureaus once it is $100,000 or more, more than 90 days overdue and the business is not engaging, after a 28 day notice of intent. Individuals who are not in business are not reported. Does tax debt show on your credit report explains where the line sits.
What lenders typically look at
| Your situation | How lenders typically treat it |
|---|---|
| Debt paid in full before application | Rarely an issue, as long as lodgements are up to date |
| Payment plan in place and kept | Case by case with major banks; commonly accepted by specialist lenders, often after about 6 months of on-time instalments |
| Overdue debt with no plan | Major banks typically decline until it is cleared; some non-bank lenders will lend if the loan pays the ATO at settlement, at a higher rate |
| Business debt listed on a credit file | Effectively a decline at major banks; some specialist lenders at premium pricing and lower loan-to-value ratios |
Two things sit behind every row. The plan instalment counts as a liability that reduces your borrowing capacity, which this page works through. And an ATO payment plan that you actually keep is treated very differently from arrears you are ignoring.
Tax debt blocking your home loan?
Get the debt managed first so the application has a chance. Free and confidential.
What usually helps before you apply
- Get every return and BAS lodged. Unlodged periods make the debt look open ended.
- Put a payment plan in place and make the instalments by direct debit so the statements show a clean record.
- Print your integrated client account statement so you can show the balance and the plan rather than describe it.
- Be upfront. Disclosed and managed debt is a conversation; discovered debt is usually the end of one.
- If the plan is to refinance and pay the ATO out at settlement, read can I refinance to pay ATO debt first.
This site does not arrange finance or recommend lenders. A licensed mortgage broker can tell you which lenders fit your file. Where a loan is not realistic, the other options still exist.
What to do next
- Check your ATO account balance and lodgement status so you know exactly what a lender would see.
- If the debt is overdue, set up a payment plan now and keep it; that alone changes how most lenders read your file.
- Speak to a licensed mortgage broker about which lenders accept managed tax debt before you lodge an application.
Related questions
Do I have to tell the bank about an ATO payment plan?
Yes. A payment plan is an ongoing financial commitment and the application asks you to disclose all liabilities. Leaving it out can be treated as misrepresentation, which is a much bigger problem than the plan itself. Most lenders can work with a disclosed plan that is being kept.
Will the ATO stop me getting a mortgage?
The ATO does not approve or block loans and does not talk to your lender. Its only direct effect is credit reporting, which applies to business debts of $100,000 or more that are overdue and not being managed. For most individuals, the ATO's role in a home loan application is limited to the statements you provide.
Tax debt blocking your home loan?
Get the debt managed first so the application has a chance. Free and confidential.
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