Free Delaware Residential Purchase Agreement Template

A Delaware residential purchase agreement is a signed contract saying who is buying a home, for how much, and when. In Delaware, it’s also where the parties settle one of the biggest closing costs: the realty transfer tax.

Delaware’s realty transfer tax is large enough that your Delaware residential purchase agreement should address it head-on.

The Rate

The combined rate is 4% of the property’s value. Of that, 2.5% goes to the state and 1.5% to the county or municipality. Where the property sits in an area with no local transfer tax, the state rate is 3%.

For example, a $350,000 home at the full 4% carries $14,000 in transfer tax.

What Counts as the Price

Consideration includes cash, checks, mortgages, liens, encumbrances, and any other valuable consideration. The Division of Revenue’s return asks for both the consideration and the highest assessed value of the property.

How the Cost Is Shared

Delaware’s Division of Revenue describes the state’s 2.5% as 1.25% assessed on the buyer and 1.25% on the seller. Its return also records each party’s percentage of responsibility, so write the split into the contract.

Rates can change, so confirm the current figures with the Division of Revenue or your county before closing.

Yes. According to the Delaware Division of Revenue, first-time home buyers get a 0.5% cut in the rate the buyer pays. For most buyers, that drops their state share from 1.25% to 0.75%.

The reduction applies only to the first $400,000 of property value, and its maximum value is $2,000. It’s claimed at the time of closing.

A Delaware closing generally follows these steps.

1. Execute the agreement. Both parties sign the Delaware residential purchase agreement, including the transfer tax split.
2. Check first-time buyer status. Note it in the agreement if the buyer plans to claim the reduction.
3. Complete the tax return. Form RTT-TAX (formerly Form 5402) is the Realty Transfer Tax Return and Affidavit of Gain and Value. It reports the price, the tax, and each side’s share.
4. Cite any exemption. If the transfer is exempt, the return must explain the basis, citing the exemption in 30 Del. C. § 5401.
5. File with the Recorder of Deeds. Record the deed at the county office and pay the tax then.

Make sure your agreement covers:

• Full legal names of every buyer and seller
• Property address and tax parcel details
• Purchase price, deposit, and financing terms
• Each party’s share of the realty transfer tax
• Whether the buyer is claiming first-time home buyer treatment
• Inspection contingencies and the closing date