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Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2710
Experience:  CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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Delaware Title transfer taxes

Customer Question

I bought a house in Delaware with my girlfriend in October 2004. Things didn't work out and she moved out and after I bought her out she signed the title over to me. I am refinancing and will be the only person on the mortgage and title. Do I still have to pay title transfer taxes since I am merely removing one person from the title? I already paid them when we moved in in October 2004. My title company says I have to pay them. Is this right? We are talking over $9000. And is this a write off if I do have to pay them?
Submitted: 11 years ago.
Category: Tax
Expert:  Christopher Phelps replied 11 years ago.

The title transfer tax is instituted under Title 30, Delaware Code, Chapter 54.


A tax is imposed on real estate transactions at the time of the execution, delivery, or presentation for recording any documents transferring the property. In general, the following are excluded from the tax: leasehold interests; mortgage foreclosure sales; conveyances between husband and wife; conveyances between parent and child; conveyances to a religious organization; conveyances without consideration; conveyances between a parent corporation and a wholly owned subsidiary; conveyances to or from a corporation or partnership from the owner thereof if the ownership in the business is identical to the proportion of ownership in the real property; and conveyances to or from the United States, this state, or to or from their instrumentalities, agencies, or political subdivisions and the University of Delaware.


There are exceptions to the application of this tax including transfers between husband and wife.  See http://www.state.de.us/finance/publications/fiscal_notebook_01/Section07/rtt.pdf for a list of exceptions.


The actual law is located here: http://www.delcode.state.de.us/title30/c054/sc01/index.htm#TopOfPage.


The bad news is that I think you are stuck paying the tax.  The good news is that under Delaware Code Title 30, Chapter 54 Section 5402, the transfer tax is to be apportioned equally between grantor and grantee meaning that your ex-girlfriend is liable for one-half of the tax.


If Delaware makes you pay the whole thing then you probably have an action against her to recover the part she should have paid.  If I were you I would follow up with your local Recorders Office and make sure they go after her for her share and not stick you for the whole thing.


 

   

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