How Can I Avoid Paying a Transfer Tax to Remove Someone From a Deed in Delaware?

Full question:

I was recently denied for HAMP for not submitting required documentation to them in a timely manner? I was not instructed that I had to do a quitclaim deed to have my ex boyfriend of 3 years ago removed from the deed then once I located him and got him to sign it and had it notarized it was sent into the recorders office. It was sent back to me stating that I must pay taxes to both the town I live in and the county I live in? I am applying for a modification because I can barely afford my home and I have a 16 year old in a treatment facility all I ever do is run from here to there. I have been told that I would owe $1110.00 to both my town and the county? I have been on SSDI since 2001 paying both mortgages by myself and raising a son with many issues on my own. Is there a way around paying these taxes such as an assumption of the property? They are telling me I can request to have my file reopened and start back at the very beginning of the process? I have been in underwriting for weeks and have to start back at square one and wait another 60 days to reach underwriting again and if in fact i have to come up with this money I know in the long run it will be worth it but I have spent years getting me debt down so I could just qualify for the program itself. The taxes were always es-crowed and I cannot afford to put myself in the position of all the debt I was in before do you have any suggestions?

• Category: Debts and Credit
• Date: 04/07/2025
• State: Delaware

Answer:

We are assuming the tax you are referring to is a transfer tax. The tax is based on the value of the property as stated in the deed. It is very difficult to avoid paying a governmental tax once it is determined to be owed. However, there is an exception to payment of transfer tax in the following case:

"Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this paragraph own 80% or more of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this paragraph. Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this paragraph own less than 80% of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this paragraph, unless, under regulations promulgated by the Secretary of Finance, such transfer or transfers are properly characterized as a sale of real property. Such characterization shall take into account the timing of the transaction, beneficial ownership prior to and subsequent to the conveyance or conveyances; the business purpose of the corporation, limited liability company, partnership, trust, pass-through entity or other entity, and such other factors as may be relevant. "

Please see the following DE statute:

§ 5402. Rate of tax; when payable; exception.

(a) Every person who makes, executes, delivers, accepts or presents for recording any document, except as defined or described in § 5401(4) of this title, or in whose behalf any document is made, executed, delivered, accepted or presented for recording shall be subject to pay for and in respect to the transaction, or any part thereof, a realty transfer tax at the rate of 2 percent of the value of the property represented by such document, unless the municipality or county where the property is located has enacted the full 11/2 percent realty transfer tax authorized by § 1601 of Title 22 or § 8102 of Title 9, in which case 11/2 percent, which tax shall be payable at the time of making, execution, delivery, acceptance or presenting of such document for recording. Said tax is to be apportioned equally between grantor and grantee.

(b) No tax shall be imposed on conveyances when the actual value of the property being transferred is less than $100.

(c) Notwithstanding subsection (a) of this section, where a valid written contract is entered into prior to August 1, 1971, the tax for such a transfer shall be at the rate imposed prior to August 1, 1971.

(d) Every person who makes, executes, delivers, accepts or presents for recording any document defined or described in § 5401(4) of this title, or in whose behalf any such document is made, executed, delivered, accepted or presented for recording shall be subject to pay for and in respect to the transaction, or in any part thereof, a realty transfer tax at the rate of 2 percent of the value of the property represented by such document, unless the municipality or county where the property is located has enacted the full 11/2 percent realty transfer tax authorized by § 1601 of Title 22 or § 8102 of Title 9, in which case 11/2 percent, which tax shall be payable as follows:

(1) The tax on the consideration attributed to the first year of the term shall be payable at the time of making, execution, delivery, acceptance or presenting of such document for recording;

(2) The tax on the consideration attributed to each successive year of the term thereafter shall be paid annually to the Division of Revenue.

(e) There shall be no tax imposed on any document described in § 5401(4) of this title entered into prior to July 7, 1973.

(f) Notwithstanding subsection (a) of this section, the rate of tax on documents described in § 5401(8) of this title shall be 1 percent on amounts exceeding $10,000, which shall be borne by the owner of the building whose construction is made subject to tax under § 5401(8).

See also:

http://delcode.delaware.gov/title30/c054/sc01/index.shtml