Delaware Property Transfer Tax Exemption – Qualified AREAS (New Castle County)

Delaware Property Transfer Tax Exemptions exist in qualified areas of New Castle County for Delaware First Time Home Buyers.  Many Delaware municipalities and counties have enacted the 1½ percent transfer tax on the purchase price, so generally the Delaware transfer tax is a total of 3% of the purchase price(1½ percent to the State and 1½ percent to the county or municipality). This amount is split between the buyer and seller of real estate, unless the parties agree otherwise in the sales contract.  If you have questions on transfer taxes or would like to apply for a mortgage call 302-703-0727 or APPLY ONLINE

The standard Delaware Real Estate Sales Contract used by Delaware Real Estate Agents splits the transfer tax equally between the buyer and the seller in section 11 of the contract.  If purchasing from a Home Builder then you must read the contract as the builders write their own contracts and determine how the transfer tax is split.

What areas qualify for the Transfer Tax Exemption?

The State offers NO Property Transfer Tax Exemption; however, the New Castle County has an exemption – .75% of county transfer tax fee – for Delaware first time home buyers (FTHB).

In the City of Wilmington, you are a first-time buyer eligible for the Property Transfer Tax Exemption if you have not purchased a residence in the City in the last three years.

In unincorporated New Castle County, you can never have owned residential property anywhere (including other states or foreign countries) to qualify for the exemption.

AREAS THAT QUALIFY FOR FTHB TRANSFER TAX EXEMPTION:

26 – City of Wilmington* (2-Digit Number Represent 1st two positions on parcel number)

UNINCORPORATED, New Castle County

AREAS THAT DO NOT QUALIFY FOR First time home buyer EXEMPTION:

INCORPORATED, New Castle County (2-Digit Number Represent 1st two positions on parcel number)

15 – SMYRNA (Town) Note: Part of Smyrna is in Kent County

16 – ARDEN (Village)

17 – BELLEFONTE (Town)

18 – NEWARK (City)

19 – ELSMERE (Town)

20 – NEWPORT (Town)

21 – NEW CASTLE (City)

22 – DELAWARE CITY (City)

23 – MIDDLETOWN (Town)

24 – ODESSA (Town)

25 – TOWNSEND (Town)

27 – AREDENTOWN (Village)

29 – ARDENCROFT (Village)

30 – CLAYTON (Town) Note: Part of Clayton is in Kent County

Example of Delaware Property Transfer Tax Calculation

If you are purchasing a home for $200,000 in New Castle County Delaware then there will be a Delaware Property Transfer Tax assessed at the closing of the transaction.  The Delaware closing attorney is required to collect the money due at closing from the buyer and the seller.  The total transfer tax due is 3% of the purchase price.

Purchase Price = $200,000

Total Transfer Tax 3% = $6,000

If the transfer tax is split equally between the buyer and the seller then the buyer owes $3,000 and the seller owes $3,000.  If the buyer is a Delaware first time home buyer and the property is located in an eligible area then half of the buyer’s portion of the transfer tax is waived so the buyer would only owe $1,500.  The seller would still be responsible to pay their full $3,000.

When Does the Buyer Pay $0 Property Transfer Tax?

There are some circumstances when the buyer will actually end up paying no property transfer tax.  Below is a list of circumstances:

1. Purchasing the home from an immediate family member (Mom, Dad, Brother, Sister, Grandmother, etc)
2. Purchasing the home from Fannie Mae, Freddie Mac, HUD, or VA.

In these two instances, the buyer’s transfer taxes are completely waived so the buyer pays $0!

What about Kent and Sussex County Delaware Property Transfer Tax Exemption?

Kent County Delaware and Sussex County Delaware also provide an exemption to the county portion of the transfer tax but again if the property is located in a municipality then you will not get the exemption except for the city of Dover.  You will need to determine if the property is in the city limits of a city or municipality to determine if exempt from the county portion of the transfer tax.

If you have questions or would like to apply for a mortgage loan please call 302-703-0727 or APPLY ONLINE

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713