Thinking of selling in 2019?
2019 brings a lot of new changes for sellers. It is most important to the Julie Gritton Team that we keep our sellers up to date on any issues effecting their transacations so they can plan in advance. See below an important legislative update for sellers:
The Delaware Division of Revenue has revised their Form 5403 with an effective date of January 1, 2019. For ALLclosings as of January 1st and thereafter the new form will be provided at closing by the closing attorney.
The revised form no longer has a checkbox where Non-Delaware Resident Sellers can indicate that they do not know the amount of tax due and will therefore pay any due tax when they file their tax return. Instead the new form will require Non-Delaware Resident Sellers who have a taxable gain to calculate and pay the amount of tax due at time of closing, OR pay a percentage of the Seller’s net proceeds (8.7% for C Corporations, and 6.6% for all other sellers).
This new form was just released within the past 2 weeks, but will impact your closings after January 1, 2019. Delaware residents are still exempted from paying the tax at time of closing and may pay it when they file their tax return. Also, remember that the IRS allows the exemption of capital gains from the sale of a primary residence (must be primary home at least 2 of the past 5 years) of up to $250,000 if filing individually, or $500,000 if married and filing jointly. This same exemption applies in Delaware and therefore that seller could check the box in Section 5 of the new form indicating that the sale or exchange is exempt from capital gains recognition.
Individuals who are not remaining Delaware residents, if not able to claim an exemption on the capital gains tax, will have to pay either the calculated tax or the applicable percentage of the net proceeds.
We request that all of our sellers currently listed for sale or any seller looking to list for sale in the future seek legal or accounting advise, and/or be prepared to pay the applicable percentage of their net proceeds.
This is not a new law or tax. The tax has been due at closing for several years; however, the old version of the form allowed a Seller to claim they did not know the amount of tax due and to wait and pay it at a later date, (which is what every Non-Resident Delaware Seller did). The new form does not allow that.
You can view a video update this as well by clicking this link: https://www.youtube.com/watch?v=MaSLFYMZt7c&feature=youtu.be
Lewes Real Estate, Sussex County Real Estate, Delaware Real Estate, Preparing to Sell, Buy with Confidence, Sell with Success!