Governor John Carney signed a bill into law this week that states that all first-time home buyers, retroactive to August 1, 2017, are entitled to a .5% reduction in the state realty transfer tax rate paid by the buyer. In August, 2017 the state realty transfer tax rate increased from 1.5% to 2.5% for properties located in counties and municipalities that impose a realty transfer tax and to 3% for properties located in areas that do not impose a local transfer tax. For most buyers this will result in a reduction of their portion of the state realty transfer tax rate from 1.25% to .75% given that most times the buyer and seller spilt the realty transfer taxes equally.

Check out fast facts on qualifying for and claiming this reduction:

  • The maximum value of this reduction is capped at $2,000 and can only apply to the first $400,000 of property value
  • The reduction may be claimed at the time of closing
  • The property must be purchased by an individual or individuals who have never held any direct legal interest in residential real estate
  • The property must be purchased by an individual or individuals who plan on living in the property as primary residence within 90 days of closing
  • The closing attorney dealing with the transaction will reflect the reduced rate on the form that is prepared and signed at closing if the buyer qualifies
  • The bill applies to all first-time homebuyers that entered into contract and closed on or after August 1, 2017 and paid the higher rate.

To apply for a refund, the borrower must complete Form 5405 and submit it directly to the Delaware Division of Revenue. The form can be found here.