This week’s blog post addresses a way for people aged 65 and over who occupy their primary residence in Delaware to lower their tax bill. I’m happy to discuss it in the context of important new legislation, and as a reminder of how comparatively advantageous it is to be a resident of Delaware.
The basic facts are this: if you’re a homeowner occupying your primary residence and you’re over the age of 65 you may be eligible for a tax credit of 50 percent against our local school property taxes. You could get a tax credit as high as $500.
To get the credit, you must occupy your residence full-time. Here are some different scenarios for making it happen.
Scenario One: You moved to your primary residence before December 31, 2012 and are still living there.
If you closed on your primary residence before December 31, 2012, you were eligible (and still are) to file for a reduced tax bill for school property taxes in the ensuing year and from then on. If you haven’t filed the form for the discount before now, you still can, and you may get a tax credit of up to $500.
Scenario Two: You moved to your primary residence after January 1, 2013 but before January 1, 2018.
If this is your time frame, you’ve been able to file for the tax credit once you resided in your home for three years. You could receive a credit as high as $400 for the fiscal year ending June 30.
Scenario Three: You’re a relatively new homeowner who moved into your primary residence after January 1, 2018.
If you’re in this position, you need to reside in the home for 10 years in order to receive the credit. After 10 years, under the current law, you could get a credit of up to $500.
Important notes for all three scenarios
Once you’ve been informed that you qualify for the tax credit, and if you continue to reside in your Delaware home as your primary residence, you don’t have to re-apply every year. The amount of your credit will be deducted by the state of Delaware before you receive your annual property tax bill.
Also note: You also have to have a valid Delaware driver’s license listing that residence as your address.
Visit finance.delaware.gov for more details. And check out the answers to these Frequently Asked Questions (FAQs), written in more consumer-friendly language.
Here’s a link to the application you – or your tax preparer – will need to fill out to receive the credit.
Please note – the deadline for receipt of the application for a refund for this fiscal year is April 30th, 2023.
Looking ahead at possible changes that could reduce your costs even more
With so many people moving here for wonderful homes and lifestyles, Delaware decisionmakers know they have to vastly expand our transportation infrastructure and health care options and keep our schools top notch. To do that, they need tax revenue to keep rolling in.
That said, they also know many seniors have limited income and lots of time to pay attention to the decisions made by the officials they do or don’t vote for. That means they really do pay attention to ways to reduce senior tax burdens and keep us happy.
That’s a good rationale for some recent legislative proposals that could – if passed – reduce your tax bill even further. Since I realize it isn’t easy to understand the arcane deliberations that take place once legislation is introduced, I’ll stay on top of this and let you know if any of these come to pass:
An increase in the senior tax credit via House Bill 29 – This is a proposed amendment that would create a bigger credit for seniors who have lived in their primary residence for 10 years following December 31, 2012 to $750. If this comes to pass it will apply to the fiscal year ending June 30 of this year. Click here for the full text.
A way to pay lower realty transfer taxes via House Bill 36 – This proposed amendment could reduce what we all pay in realty transfer taxes. Prior to August 1, 2017, that rate was 3 percent for each transaction, a cost that was split between the buyer and the seller. If passed, it would decrease by 1 percent the rate the state receives from real estate transactions, taking it back to that 3 percent, split by buyer and seller. Click here for the full text.
One more bottom-line fact to note: Property taxes in Delaware are among the lowest in the nation, and we also don’t have to pay sales tax on most items, so it’s a great time to make your move, or to just be happy you’ve already done so!