Is There a Delaware Transfer Tax on a Refinance

There is no Delaware Transfer Tax on a refinance, this is a common question but there can never be a transfer tax on a refinance because a transfer is when the property changes hands from one owner to another.  The tax on a refinance is called a mortgage tax.  Delaware doesn’t have a mortgage tax either.  The only government fee you will pay on refinancing a home in Delaware is the recording fee to the county for recording the new mortgage.  Delaware technically doesn’t have a transfer tax it is actually a transfer fee.  This is a big distinction because a fee is not tax deductible as a tax would be.  The Delaware transfer fee on a purchase is 3% total.  Customarily split 1.5% to the seller and 1.5% to the buyer.

If you add someone or take someone off the title to the property then you will also have to record a new deed.  This event could trigger a transfer tax because if the person added or removed from the title is not related or a spouse then you are technically selling the one person’s interest in the property.  This would cause a transfer fee to be assessed by the state of Delaware for half the value of the property.

For example, a couple buys a house together who are not married.  After several years, the couple decides to part ways and one person decides to keep the house so refinances the mortgage to remove the second person from the mortgage and the deed.  This is considered a sale of that person’s interest in the property to the other person so you would have to pay a transfer fee of 3% total on half the value of the property.

Now if these two people were married instead and separated and did the same thing while still married, then there is no transfer fee because they are married and are of the same family.

If you need help with refinancing or purchasing a home, please feel free to call me at 302-703-0727 or you can also APPLY ONLINE HERE.

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