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January 22, 2018

UPDATE ON DELAWARE NON-RESIDENT WITHHOLDING REQUIREMENTS

In 2010, Delaware enacted laws which require non-resident persons, corporations and pass-through entities that sell real estate owned in Delaware to declare and pay, at settlement, their estimate of the tax due on the gain recognized from the sale. The statutes, as have been enforced by the Division of Revenue, have had little practical effect on real estate transactions because non-resident sellers were allowed to defer calculation of taxes due until after settlement. The Division of Revenue is now changing its policy to strictly comply with the statute, and will no longer allow non-resident sellers to defer calculating the taxes.

It is very important that Delaware real estate agents and non-resident sellers understand this requirement and how it will affect non-resident sellers. If you are not a Delaware resident and are selling Delaware real estate, then the state will withhold a portion of your proceeds.

The change is currently scheduled to go into place April 1, 2018. If you have any questions about this change and how it will affect sellers, please don't hesitate to call our office to speak with Peter Kirsh or Sara Auerbach.

 

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