A bill sponsored by State Rep. Lyndon Yearick to make homes more affordable has cleared a House committee.
House Bill 286, released Wednesday by the House Revenue & Finance Committee, seeks to reduce a state tax on home sales.
At present, the real estate transfer tax is 4% of a home’s purchase price, which is among the highest in the nation. The levy is an amalgam of two separate components. The state imposes a 2.5% tax, with applicable county or municipal governments usually imposing the remaining 1.5%.
Applied to the approximate median value of a single-family home in Delaware, $400,000, the combined tax results in a total obligation of $16,000, typically split between the buyer and seller.
This proposal would reduce that burden for qualifying affordable housing transactions.
Under the bill, homes sold for less than $350,000 would not be subject to the state’s 2.5% portion of the transfer tax.
Homes sold for between $350,000 and $500,000 would have their total transfer tax reduced from 4% to 3% through equal one-quarter-percentage-point reductions over four years, starting January 1, 2027. Any homes in this price range sold after January 1, 2030, would pay a 3% realty transfer tax. Local governments’ transfer tax revenue would not be impacted.
Rep. Yearick acknowledged that his proposal would reduce the amount of money flowing into the state’s coffers by more than $40 million when the bill is fully implemented.
“Our state should focus on helping those who need it most, when they need it most,” Yearick said. “While some may worry about reduced state revenue, they should also consider the long-term cost of increased public aid. Reducing financial pressure on vulnerable citizens up front is more efficient and more effective than forcing families into government assistance programs later.”
Due to the loss of state revenue, this bill has been assigned to the House Appropriations Committee for further review.
