The bill aims to reduce property transfer taxes

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Delaware’s real estate transfer tax could drop 1% this year under a new bipartisan proposal. | DBT PHOTO BY JACOB OWENS

DOVER — A new bipartisan bill seeks to cut Delaware’s real estate transfer tax by 25%, essentially reversing a state increase from five years ago.

Representative Bill Bush (R-Dover)

House Bill 358presented March 31 by lead sponsor Rep. Bill Bush (D-Dover), has already garnered 17 House sponsors and 10 Senate sponsors spanning both the Republican and Democratic parties, including the two party leaders to bedroom.

The bill will first be heard by the House Administration Committee, although a hearing has not yet been set. If passed, the tax cut will come into effect on July 1.

HB358 would reduce the state’s share of real estate transfer tax to 1.5% from 2.5%, while local jurisdictions would continue to collect 1.5% of the value of a sale. Seeking to make up for a budget shortfall of hundreds of millions of dollars in 2017, lawmakers increased Delaware’s real estate transfer tax from a longstanding 3% on most properties to 4% currently, with the state collecting the full percentage point. additional – in rare cases where no local tax is levied, the state collects 3%.

“Typically, this cost is shared between buyer and seller. However, in today’s competitive housing market, potential buyers often pay the full tax to convince sellers to accept their offers,” the rep said. Kevin Hensley (R-Odessa), who works in the real estate industry, in a statement.

Rep. Mike Ramone (R-Pike Creek) said lawmakers agreed to raise the transfer tax for just two years to cover the budget gap, but that expiration date was not in the final bill, and she continues to be paid on small sales. and big.

“Our high property transfer tax impacts two groups who can least afford it – millennials and seniors,” Ramone said in a statement. “If we can do something to make home ownership easier for young people while giving our older citizens a less costly opportunity to gracefully transition into their golden years, I think we have an obligation to do so. To do.”

A drop in tax revenue would come at a time when Delaware is experiencing a boom in real estate sales. The state’s independent tax analyst council, the Delaware Economic and Financial Advisory Council (DEFAC), estimates that Delaware will raise nearly $300 million this fiscal year from the real estate transfer tax alone, about 25% more. than last year. This increase was driven by rising property values ​​across the board, but also by a number of high value sales, including almost all of the sales from the previous decade. Top 10 saleswho alone have poured millions into the state coffers.

Delaware has traditionally classified at or near the top of all states in terms of real estate transfer taxes, a distinction that led the state’s Board of Realtors to push for a reduction for several years. There are 14 states that have no such tax on real estate sales, while neighboring states like Pennsylvania and Maryland charge 1% or less on a sale.

According to Long & Foster Real Estate, the median price for a home sold in Delaware in February was $335,000. HB358 would reduce the transaction cost for the sale of such a home by nearly $3,400.

Based on DEFAC’s latest estimates, HB358 would allow buyers and sellers to collectively retain more than $100 million per year from the tax reduction. DEFAC projected to end the current fiscal year with a budget surplus of nearly $800 million, prompting lawmakers to find ways to return those savings to residents.

Susan Giove

A bill that has already received bipartisan support will cut checks by $300 per taxpayer as a direct incentive. Now, HB358 looks set to deliver the change real estate agents have been looking for for years.

“As stewards of the American dream of home ownership, we are thrilled with the introduction of HB358. This legislation could make that dream a reality for many families across the state. Delaware has the tax highest state-level real estate transfer rate in the nation, and while we’re proud to be the number one state, that’s not a ranking we want,” said Susan Giove, president of the Delaware Association of Realtors’ statement, “Real estate transfer taxes can become a major barrier to home ownership because they must be paid in cash at the settlement table in addition to other closing costs. We believe this legislation will make the more affordable housing for anyone looking to buy or sell a home and we are grateful to all the sponsors for bringing in this legislation at a critical time in today’s property market.

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