Tax Changes for Out-of-State Residents You Should Know

Those with a 2nd home in Delaware may be affected by these Income Tax changes.

Changes are coming in January 2019 that may affect you when you sell a 2nd home in Delaware but live in another state.

important capital gains tax changesEstimated Income Tax will be collected at settlement

Let’s say you purchased a second home in Delaware but your primary residence is in New Jersey or New York or anywhere but Delaware. If you decide to sell that home, taxes may be due. But here is the change that goes into effect January 1st, 2019:

Delaware now requires Out-of-State Sellers to pay the tax as part of the settlement of their property. The Delaware Contract is now being modified to add a disclaimer to Sellers advising them of their responsibility to pay the tax. Sellers will be required to provide the calculation from their CPA, using Form 5403, to the Attorney at settlement. The Settlement Attorney is required to report it to the State.

So, what happens if the Seller does not bring the completed Form 5403 to the settlement table? Settlement will not occur. Let me repeat that –

Settlement will not occur if the Seller does not bring completed Form 5403 to settlement.

At Active Adults Realty, we have added this to our Listing Checklist. If you list your home for sale with us, we will make sure you know about this requirement.

What if you are a Buyer expecting to go to settlement, BUT the seller is an out-of-state resident and does not comply with this requirement? See above; your settlement will not occur. If you are working with an Active Adults Realty Buyer’s Agent, we will make sure that the Listing Agent has reviewed this with the Seller and do our very best to make sure that settlement will not be delayed.

For more information please go back and review our other articles on the topic of real estate taxes and Capital Gains:

If you are preparing to buy or sell a home with active adult living in mind, why not sit down with an Active Adults Realty agent here in Delaware, and discuss the best way to prepare to get a great deal. We are happy to have a no-strings-attached discussion with you and help you best prepare to make the right decision on a home when the time arrives. Contact us today to schedule an appointment.

About Christine Davis

Christine grew up in northeastern Pennsylvania in a small town called Pittston, which is located between Wilkes-Barre and Scranton. Upon graduation, she enlisted in the United States Air Force, where she proudly served for eight + years at a variety of bases throughout the world, including Holland, Korea, and New Mexico. While in the Air Force, Christine spent most of her time working in the civil engineering career field where she thoroughly enjoyed meeting and working with such a diverse group of people with varying backgrounds and experiences, and learned so much from each of them. Christine’s last assignment in the Air Force was at Andrews Air Force Base in Maryland, and that’s when she discovered the Delaware beaches. Growing up in PA, her family spent time at the Jersey shore. But once she moved to MD, she became one of those many drivers making the trek across the Chesapeake Bay Friday afternoon to visit the Delaware beaches for the weekend. Upon Christine’s separation from the Air Force, she spent a small amount of time working in Washington, D.C., but it didn’t take long before she was drawn to the quiet, slow pace of Lewes and Rehoboth Beach, “the nation’s summer capital”. Christine moved to Rehoboth Beach in 1999 and finished her degree in Business at Delaware Tech. At the time she was working for a large physician organization when a friend recommended that she become a REALTOR because she loved helping people and loved looking at homes. She was reluctant for quite a while because Christine didn’t think of herself as a salesperson. But after much urging by her friend, Christine decided to get her real estate license in 2003 and has not looked back since. Christine still doesn’t think of herself as a salesperson, but rather a facilitator between buyer and seller, working toward a common goal. Christine aims to make the process as smooth and fun as possible but also educates the buyer and seller along the way so they can make the best decision possible. Christine now lives in Lewes and although she misses the mountains of PA, she thoroughly enjoys spending as much time as possible at the beach, especially Cape Henlopen State Park. Christine’s philosophy in life is that it’s too short. Never spend so much time making a living that you forget how to live.

folder_openDelaware Real Estate, Home Sellers, Real Estate in Delawarelabel, , , , , , ,