Downsizing from a Delaware home
Letting go of the house where your children grew up is partly about money and partly about everything else. On the money side, Delaware homeowners over 65 often carry tax breaks that do not move with them automatically, and the deadlines for re-applying fall in the spring. This page covers those credits county by county, the federal tax rule on the sale, the state’s free help for older adults, and the ways to sell, including when selling to us is the wrong fit.
The date that matters: April 30That is the statewide deadline for the Senior School Property Tax Credit, and the filing deadline for the over-65 exemptions in Kent and Sussex counties as well. If you are moving to another Delaware home, the credit does not follow you on its own; Sussex County says plainly that you must re-apply after a move. Missing April 30 can mean a full year at the higher tax bill.
What downsizing usually looks like here
Downsizing usually starts from one of three places. Some want a smaller, single-floor home nearby and need the equity from the old house to buy it. Some are moving in with family or out of state to be closer to grandchildren. And some are moving into assisted living or a care community, often with a son or daughter handling the house. The paperwork differs a little for each, but the same questions come up: what happens to my tax breaks, will I owe tax on the sale, what do I do with forty years of belongings, and who can help me think it through.
Your property-tax breaks, and what happens when you move
The state’s Senior School Property Tax Credit
Delaware homeowners aged 65 and up can receive a credit of half their regular school property taxes, up to $500, on their primary residence, according to the Department of Finance. Who qualifies depends on when you became a Delaware resident: those domiciled here before 2013 qualify in the next tax year, those who arrived from 2013 through 2017 need three consecutive years, and anyone who established domicile on or after January 1, 2018 needs ten. The tax bill must be paid in full by the end of each tax year to keep the credit for the next one.
Once approved, you do not re-apply every year, but the state says to contact your county tax office if you move, and you may be asked for a new application. Sussex County is blunter: the credit does not transfer to a new property, and your driver’s license must show the new address.
County exemptions for homeowners over 65
| County | Who qualifies | Filing |
|---|---|---|
| New Castle | Partial exemptions for taxpayers over 65 or disabled, based on income levels set out in the county’s Over-65 Exemption Application. | Office of Assessment, 87 Reads Way, New Castle, 302-395-5520. |
| Kent | 65 by May 31; Delaware resident five years; living in the home one year; income up to $18,000 single or $24,750 with a spouse, not counting Social Security, Railroad Retirement Tier I or disability income; county taxes paid up. | By April 30 each year, to the Assessment Office; you re-apply every year. |
| Sussex | 65 by June 30; Sussex resident for the five years before July 1; income other than Social Security up to $6,000 single or $7,500 married; applies to assessed value up to $229,000. | January 1 through April 30, on the county’s exemption form. |
Figures are from each county’s own pages and change by ordinance or budget; confirm before relying on them.
Two consequences follow for a sale. First, if you are buying again in Delaware, line up the new applications before April 30 so the next bill reflects them. Second, the state disclosure form asks whether your current tax amount reflects exemptions or discounts that will not transfer, because your buyer’s bill will be higher than yours. Answer it honestly; it is a normal part of selling a senior-owned home.
The sale itself: tax, title and family
Federal tax on the gain. Publication 523 from the IRS caps the federal tax-free profit on a main home at a quarter of a million dollars per person, double that for spouses on a joint return, provided the house was yours, and your residence, for any 24 months inside the five years ending on sale day. Someone who bought in the 1980s or 1990s and has added rooms and a new kitchen since may have a gain above that line, so ask a tax preparer to run the figure before signing anything.
Everyone on the deed signs. If a late spouse is still listed, or the house sits in a revocable trust, the Delaware attorney who conducts settlement will need the death certificate or trust papers. Gather them early so they do not hold up the settlement date.
Selling to a child. Delaware exempts transfers between parent and child from the realty transfer tax, and sales within the family line are excused from the seller disclosure report. That can make a family sale cheaper, though it raises its own questions about price, Medicaid planning and fairness among siblings that an elder law attorney should review.
Transfer tax on an outside sale. In an ordinary sale the tax is split evenly between buyer and seller by statute; with us as the buyer, that means you pay half and we pay half.
The realistic choices
| Route | What happens | Fits when | Watch out for |
|---|---|---|---|
| Stay and adapt | You modify the house for single-floor living or bring help in. | You love the house and it can be made safe. | Ask DSAAPD about home modification support before paying for it yourself. |
| Sell to family | A child or relative buys the house. | Someone in the family wants it and can finance it. | Price, gift and Medicaid questions; get an elder law attorney’s view. |
| List with an agent | The house is prepared, shown and sold to the highest offer. | It shows well and you can face weeks of showings. | Clearing out, repairs a buyer’s inspector asks for, and commission. |
| Sell to a cash buyer like us | We buy as-is, on the date you pick, and you leave what you do not want. | The house is dated or needs repairs, or clearing it out feels impossible. | A lower price is the trade for simplicity, so weigh one against the other. |
Nothing here is tax or legal advice. A tax preparer and an elder law attorney can apply it to your circumstances.
A well-kept house in a strong neighborhood will almost always fetch more on the open market, and if you can manage the preparation, that is the route to take. We fit when the kitchen and baths are original, the roof or heating system is near the end, or the thought of sorting every closet before listing is what has kept you from moving at all.
A downsizing folder worth starting now
- The deed, and any trust papers. Plus a death certificate if a spouse on the deed has passed away.
- This year’s tax bill. It shows which credits and exemptions you receive now.
- Mortgage or home equity statements. Even a small remaining balance has to be paid at settlement.
- The move-in date at the new place. Settlement can be set around it.
- A short keep list. Items coming with you, items promised to relatives, and everything else.
How a sale to us works when you are downsizing
- One visit, with family there if you like, and no repairs or staging beforehand.
- A written cash number, usually within 24 hours, that you can show your children or your adviser.
- Settlement on your date, weeks or a few months out, conducted by a Delaware attorney.
- Keep what you love; everything else can stay behind. A short stay after settlement is sometimes possible if it is written into the agreement.
If the house belongs to a parent who has already moved into care, see selling a vacant house; if a parent has died, see inherited house and probate. Local tax and office details are on our county pages for Sussex, Kent and New Castle.
Free help from the stateDelaware’s Aging and Disability Resource Center, run by the Division of Services for Aging and Adults with Physical Disabilities, offers options counseling on care and housing choices, help with Medicaid and caregiver support, and case management, regardless of income. Call 1-800-223-9074 (TDD (302) 424-7141) or visit the ADRC page. When you want to know what the house would bring as it stands, call us at (856) 226-4289.
Related situations
- Inherited house or probateWhen the house passes to children who now have to decide what to do with it.
- House needs major repairsAn original kitchen, an aging roof or a tired furnace you would rather not replace.
- Vacant houseA parent has moved into care and the house is sitting empty.
- Tired of being a landlordRetiring from a rental you have owned for years.
Questions older Delaware homeowners ask about downsizing
Does my Delaware senior school tax credit move with me to a new house?
Not automatically. The Department of Finance says to contact your county tax office when you move because a new application may be required, and Sussex County states that the credit does not transfer to a new property. File for the new home by April 30.
How much is the Delaware senior school property tax credit?
It is half of your regular school property taxes, up to $500 a year, on your primary residence, for homeowners aged 65 and over. Eligibility also depends on how long you have been domiciled in Delaware, and the tax bill must be paid in full each year to keep it.
I moved to Delaware recently. Can I get the senior school tax credit?
Possibly not yet. Anyone who established domicile in Delaware on or after January 1, 2018 must have lived here for at least 10 consecutive years before qualifying, while those who arrived from 2013 through 2017 need three consecutive years.
What are the income limits for Kent County’s over-65 exemption?
Adjusted gross income up to $18,000 for a single applicant, or $24,750 combined with a spouse, excluding Social Security, Railroad Retirement Tier I and disability income. You must be 65 by May 31, apply by April 30, and re-apply every year.
What does Sussex County’s over-65 exemption require?
You must be 65 by June 30, have lived in Sussex full time for the five years before July 1, and have income other than Social Security no higher than $6,000 single or $7,500 married. It applies to assessed value up to $229,000, and the filing window runs January 1 through April 30.
Is the profit on my long-time Delaware home taxable?
Often not. Under IRS Publication 523, a quarter of a million dollars of profit per person, or double for spouses on a joint return, is free of federal tax when the house was owned by you and served as your residence for any 24 months inside the five years ending on the sale date. Anything above that may be taxed, so ask a tax preparer.
Does a buyer need to know about my senior tax exemption?
The Delaware disclosure form asks whether your current tax amount reflects exemptions or discounts that will not transfer to the buyer. Answering yes simply tells the buyer to expect a higher bill than yours; it does not affect your sale.
Can I sell my house to my son or daughter without transfer tax?
Delaware exempts transfers between parent and child from the realty transfer tax under 30 Del. C. § 5401, and sales within the family line are exempt from the seller disclosure report. Talk to an elder law attorney about price and Medicaid planning before you do it.
Who can help me decide between assisted living and staying home?
Delaware’s Aging and Disability Resource Center, part of DSAAPD, offers free options counseling on long-term care choices regardless of income. Call 1-800-223-9074 or email DelawareADRC@delaware.gov.
Must the house be cleared out before you buy it?
No. Pack whatever you are keeping; furniture, boxes and the attic and basement leftovers can stay, and clearing them out after settlement is our job.