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Delaware Real Estate Transfer Tax Going to 4% [August 1 2017]

John Thomas July 6, 2017 Tags:
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Delaware Real Estate Transfer Tax Going to 4% Effective August 1, 2017

Delaware Real Estate Transfer Tax is going up from 3% to 4% effective on all contracts dated August 1, 2017 or after.  The Delaware legislature decided to balance the budget at the last minute with no public comment by increasing the state transfer tax from 3% to 4%.  Delaware is currently number 2 in the United States for Real Estate Foreclosures and the real estate market has lagged the country in appreciation but Delaware legislators decided it would be best to balance the budget on the backs on home buyers and home sellers.

There was an amendment proposed to give an exemption to first time home buyers for the increase in the state portion of the transfer tax bu the amendment was tabled and not voted on by the assembly.  Currently first time home buyers in Delaware get an exemption from the county portion of the transfer tax in each of the three counties: New Castle, Kent, and Sussex.

How much more does this cost Delaware Home Buyers?

Delaware Real Estate Transfer TaxFor a home buyer purchasing a home for $250,000 the current Delaware Real Estate transfer tax of 3% is split equally on a re-sale of 1.5% to the buyer and 1.5% to the seller.  So a Delaware home buyer would pay $3,750 to purchase a home and the home seller would also pay $3,750.  Under the new law which takes effect for all new contracts of sale on or after August 1, 2017 the transfer tax is increased to 4% so the same Delaware Home Buyer would now pay $5,000 which is an increase of $1,250.  The home seller would also now pay $5,000 which means the home seller is going to be less willing to negotiate to pay the buyer’s closing costs because their cost to sell the home has just gone up so it will be a double whammy on the home buyer.  They will pay $1,250 more to purchase the home and will probably receive $1,250 less in seller concessions toward closing costs so that is a net $2,5000 more out of a buyer’s pocket

  • Home Buyer Currently Pays – $3,750 at 3% of $250k
  • Home Buyer Will Pay – $5,000 at 4% of $250k

How much MORE does a Delaware First Time Home Buyer Pay?

A first time home buyer in Delaware that has never owned a home before receives an exemption on the county portion of the Delaware Real Estate Transfer Tax in all three counties of Delaware.  A first time home buyer purchasing a $250,000 home would only have to pay $1,875 in real estate transfer tax under the current 3% law.  The home buyer pays 1.5% and the home seller pays 1.5% but the first time home buyer is exempt from the 0.75% that goes to the county.

Under the new law with the transfer tax going to 4%, the 1% increase all goes to the state and the state does not have an exemption for first time home buyer so the same first time home buyer will pay $3,125 which is an increase of $1,250.

  • FTHB Currently Pays – $1,875 at 3% of $250k
  • FTHB Will Pay – $3,125 at 4% of $250k

Why Did the Delaware Real Estate Transfer Tax Increase to 4%?

The Delaware General Assembly voted to raise the state portion of the Delaware real estate transfer tax a full 1% with the passage of house bill 279 which is effective on all new ratified contracts of sale on or after August 1, 2017.  The vote in the house was 31-9 to pass the bill which was signed into law by the Governor John Carney.  The increase in the transfer was the solution to balance out the remaining short fall in the State Budget.

Senator Robert Marshall introduced and amendment to the bill to exempt Delaware first time home buyers from the increase in the state transfer tax but the amendment was tabled until January 2018.  The senate promised to work with the Delaware association of REALTORS in January to amend the bill.

Get Under Contract Prior to August 1, 2017!

The big message for home buyers and home sellers in Delaware is to get under contract prior to August 1, 2017 to say money on the home purchase/sale.  If you need a fast, accurate mortgage pre-approval to qualify to purchase a home, give the John Thomas Team with Primary Residential Mortgage a call at 302-703-0727 or APPLY ONLINE

About John Thomas

John Thomas and his team are long-time Delaware natives. They know the local real estate market as well as they know the loan products that help them serve it.

Dedicated to helping first-time buyers; the John Thomas Team are experts on first-time buyer loan programs (FHA, VA, USDA) and conduct monthly first-time buyer seminars that have been attended by more than 3000 Delaware buyers.