Just the Facts: Not All Community Real Estate Taxes are the Same

When deciding which state to live in and considering the taxes, be sure to carefully compare the same data because not all taxes are the same in all communities.

Carefully examine the real estate taxes

Questions about taxes often come up when talking with people who live in other states. They have heard Delaware property taxes are low, but when searching online, they often end up with questions. How information on property taxes and other fees are listed is often limited by the way data is presented on different websites. I will try to keep it simple, so bear with me.

Property Taxes

Unless you purchase a home within a town limit, your only property tax is from the County and this includes your School Tax. The taxes are broken down on your annual property tax bill, but it is all in one bill. If you use a mortgage to purchase your home, the monthly taxes will be collected as part of your mortgage payment and paid by the mortgage company when due. If you are someone who wants all the details, you can find an explanation of how property in each county is assessed and how the current tax rate is calculated Delaware Property Tax Rates.

Town/City Property Taxes

If the home you purchase is located within town limits, you will also pay a separate town or city property tax, billed by the municipality. We’re talking hundreds, not thousands of dollars especially for towns in Southern Delaware.

Special Tax or Bond

In certain communities, there may be a special tax or bond repayment paid annually for a specified number of years. This type of special tax repays a bond which was issued to cover infrastructure, perhaps water and sewer, roads, or even amenities necessary to create the community. There are several ways that the buyer always pays for these necessities:

  1. The cost is included in the price of the lot/home package at purchase.
  2. The cost is paid separately at settlement. These charges may be called “connection fees” or “impact fees.
  3. The cost is paid in annual payments over several years. This is called a Special Tax or Bond Payment.

One way or another, we will reimburse the developer or the municipality for the cost of the infrastructure necessary to turn a vacant parcel of land into a beautiful community with lots of amenities.

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