Help for Delaware First-Time Home Buyers
October 9, 2018

History of the Transfer Tax

During the 2017 Delaware Legislative session, the Delaware Real Estate Transfer Tax was raised from 3% to 4% in an effort to help balance the State budget. This increase was effective on all contracts dated August 1, 2017 and after.  The transfer tax is split equally between the buyer and the seller of a home in Delaware.  For example, a $250,000 home would result in a transfer tax of $10,000 (previously $7,500), of which the buyer and seller would both contribute $5,000 (previously $3,750). 
 
Prior to this increase, a first-time home buyer received an exemption on the county portion of this tax.  After the 2017 increase, however, a first-time home buyer was no longer able to receive this exemption, as the entirety of the 1% increase was slated for the State.

Present Day Situation

New Delaware legislation, effective August 28, 2018, now allows first-time home buyers to pay their portion of the transfer tax at the lower 3% rate, and exempts them from the county portion under certain conditions. 
 
Retroactive to August 1, 2017, the regular rate of tax (their half of 4%) is reduced by 0.5%, multiplied by the property value, up to $400,000.  On a $250,000 property a first-time  home buyer would now be responsible for $3,750, and may even be further reduced to $1,875 if the home buyer meets certain conditions that would exclude them from the county tax portion.

Next Steps

A rebate form, Form 5405, has been created by the Department of Finance to help those first-time buyers who purchased homes between August 1, 2017 and August 28, 2018.  The form is available HERE.  If this applies to you, or someone you know, please encourage them to check back for the rebate form. 
 

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