Real estate transactions in Delaware require a transfer tax of 4% of the sale price, which is evenly split between the seller and buyer. For instance, a $300,000 house has a transfer tax of $12,000 total — $6,000 to be paid by the buyer, and another $6,000 to be paid by the seller. There are some special exemptions for buyers, which we’ll get into later.
If you want to mitigate the cost of your Delaware transfer taxes, Clever Real Estate has a solution! Our concierge team will partner you with a local expert who can negotiate the best deal for you — they may even be able to get the other party to shoulder the entire transfer tax dues.
Here's everything property owners, buyers, and sellers need to know about Delaware real estate transfer tax.
What are real estate transfer taxes?
Real estate transfer taxes are charged when property changes hands. It's a percentage of either the sale value or assessed value of your property, depending on what state you're in. Thirty-five states and the District of Columbia have transfer taxes.
Real estate transfer taxes are also known as real estate conveyance taxes, mortgage transfer taxes, documentary stamp taxes, and property transfer taxes. Transfer taxes are used for filing purposes and help fund land developments and HUD properties and programs.
Transfer taxes can vary on a regional, state, and local level, so it's important for buyers and sellers to work with an experienced real estate agent to ensure they completely understand the transfer tax process before buying or selling property.
If you're buying property, selling property, or have inherited property, transfer taxes in your state and county are something you need to be familiar with. Speak to a Clever Partner Agent about other tax savings for buyers and sellers. They will also be able to guide you to a host of government programs and grants that can cut down on your closing costs.
How much are transfer taxes in Delaware - and who pays?
Transfer taxes in Delaware are 4% of the purchase price of the property, with 2.5% going to the state and 1.5% going to the county. Common practice is for the buyer and seller to split the transfer tax costs evenly, with both the buyer and seller paying 2%.
First-time buyers in Delaware typically qualify for state-level exemptions. For example, Delaware first-time buyers automatically qualify for a state transfer tax exemption on a purchase price up to $400,000. First-time buyers purchasing property worth more than $400,000 will pay 1.25% of the amount above $400,000.
In this case, the first-time buyer would still be responsible for paying a 0.75% transfer tax to the county, while the seller would still be responsible for their full 2% share (1.25% to the state and 0.75% to the country).
To provide a more concrete example, a median home in Delaware is worth $274,067. The seller and buyer of a $274,067 home would, unless exempt, pay $5,481 in transfer taxes. If the buyer is exempt from state tax, they would instead pay $2,056, while the seller will still be responsible for their $5,481 share.
There’s no way around paying this cost, but a skilled real estate agent can help you negotiate for a lower tax burden.
If you work with Clever, you’ll save even more money from our low fees — sellers only pay a 1% listing fee (compared to the national average of 3%), while buyers can get up to 0.5% Clever Cash Back after the sale goes through. The savings you make can help recoup the cost of some of your tax dues.
Can you deduct transfer taxes?
Yes and no.
Unfortunately, transfer taxes are not tax-deductible for the buyer or the seller, unless the property is an investment property. However, property owners can include transfer taxes in the “cost basis” of the property (the amount you paid to acquire it).
In this situation, sellers can deduct the tax from the effective sale price of the home when computing the capital gain or loss. Raising the cost basis of the home decreases the capital gain on the sale. This will help reduce the seller's tax burden.
There is also an exemption to the no deduction rule - if the property being taxed is a rental home or real estate investment, transfer taxes can be deducted as a work expense.
Delaware transfer taxes summary
While you now know the basics of Delaware transfer taxes, actually computing and paying for them can be a difficult task. A local expert can make the process easier, as they know the ins and outs of transfer taxes, and will also ensure you get the best deal possible out of your transaction.
Clever can help you find the best local agent to assist you. Our partner agents come from the biggest names in real estate, like Keller Williams, Century 21, and RE/MAX — so you know they have the experience and knowledge to give you the best service.
On top of that, our 1% listing fee for sellers and 0.5% Clever Cash Back for buyers will ensure that you save money while maximizing the benefits of full-service assistance.