As a property manager, landlord, or investor, it's crucial to understand property tax and how it's paid in Delaware. Whether you're thinking of buying a few houses or building an apartment complex, property taxes are a large part of the financial picture.
You likely have questions about how the amount gets calculated and how many times per year you pay the tax. This comprehensive guide will help you understand the tax system in Delaware, whether you're a property manager, investor, or landlord. Let's get started!
Understanding How Delaware Property Taxes Work
The local government in Delaware doesn't reassess its property values regularly, which is unlike most states. Instead, the cities and counties base property taxes on the values that were calculated during the last assessment.
Kent County's reassessment year was in 1987, but it was 1983 for those in New Castle County. Likewise, Sussex County saw a reassessment year of 1974.
Market Value and Assessed Value
The assessed value is based solely on the market value during the reassessment year. Therefore, Kent County values are equal to roughly 60 percent of the market value in 1987.
When Reassessments Occur
If you build a new structure on a lot or make additions to the property, you'll get a reassessment. However, the assessor won't determine its current value. Instead, they focus on what that value would have been in its reassessment year.
New Castle County Property Tax Exemption
New Castle County sees the highest property tax bills, but they're lower than the nationwide average.
Senior citizens can get a property tax exemption, claiming up to $715.64 each year. Likewise, they often get discounts on water and sewer bills. The maximum income for qualifying seniors is $19,000 for married couples and $15,000 for singles, which does not include Social Security income.
Sussex County also has lower property tax rates, which sits at about one-third of the average in the US. Rates will vary based on the school district. For example, the Indian River School District has a rate of $3.035 per $100.
The tax rate for Kent County in the 2024 fiscal year sits at 0.51 percent. However, the actual taxes you pay could vary because assessed values are equal to 60 percent of the market value noted in 1987. Prices have significantly fluctuated since then, so taxes could differ between houses with similar current values in the same tax district.
How Often Will You Pay Property Tax Each Year in Delaware?
Some states allow you to pay two smaller amounts for property taxes. However, Delaware isn't like that. Here are the dates you'll need to know:
- New Castle County - July 1
- Sussex County - July 1
- Kent County - June 1
Consequences of Late Payments
If you don't pay your tax bills on time each year, the government could take these actions:
- Serve a notice of warrant
- File a notice of judgment
- Seize and sell the property
- Assess a 100 percent penalty when you owe withholding taxes
- Notify payers of dividend and interest income to start backup withholding
How to Pay a Property Tax Bill in Delaware
There are many ways to pay your tax bill in Delaware. These include:
- Pay online with a credit card by visiting this website.
- Use the drop box at the New Castle County Government Center's main entrance.
- Visit the New Castle County Government Center to make walk-in payments between 8 a.m. and 4 p.m.
- Mail the payment using the self-addressed envelope sent with your bill.
How Much Is Property Tax in Delaware?
Property tax rates are significantly affected by the reassessment system in the state. Sussex County hasn't had a reassessment in about 45 years, so there could be higher prices to pay because the assessed value is lower.
Generally, property taxes account for 25 percent of the General Fund revenue for the city, which is roughly $46.5 million for the fiscal year of 2024, which started July 1, 2023, and will end June 30, 2024.
Overall, here's what you should expect to pay based on the median home value:
- Kent County - A median home value of $226,600 will have a property tax rate of 0.56 percent, which means the annual payment will be about $1,263.
- New Castle County - A median home value of $226,500 will have a property tax rate of 0.85 percent, which means the annual payment will be about $2,258.
- Sussex County - A median home value of $269,700 will have a property tax rate of 0.42 percent, which means the annual payment will be about $1,120.
How Is Property Tax Calculated in Delaware?
Property tax is calculated based solely on the market value of the last assessment. It's been decades since this has been done, so the prices you'll pay are significantly lower than in other states.
How Can I Lower My Property Taxes in Delaware?
Though property taxes are quite expensive, there could be ways to lower the costs. They include:
- Build new additions, keeping in mind that they will still be assessed based on the market value of the last reassessment
- Be responsible and pay your bill on time
- Use the exemption if you're a senior citizen
Important Propositions for Delaware Real Estate Investors
There are no propositions to consider as a real estate investor in Delaware. It works differently than any other state in the country. Overall, it's wise to understand the last assessment period of the county you live in and note that property taxes will be paid according to those numbers.
Owning property in Delaware is an attractive investment opportunity for many. However, it's crucial to understand the tax implications.
The property tax system is fairly easy to understand, and you're paying a lot less than you would in any other state!
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.