SELLERS TAKE NOTE – FORM 5403 Effective Jan 1, 2019

SELLERS TAKE NOTE – FORM 5403 Effective Jan 1, 2019

The Delaware Division of Revenue has revised Form 5403, Declaration of Estimated Income Tax, effective for any transactions occurring after January 1, 2019, regardless of the contract date.

The new form requires the Seller to fill out section 6 of the form, unless they are exempt, which would be if the Seller remains a resident of Delaware for the entire tax year in which the closing occurs, or if it is the sale of their primary property and the capital gains would not exceed $250,000 for a single owner, or $500,000 for married owners.

This form is required to be included with any deed recordation by state law.  The revised form authorizes the State of Delaware to withhold the tax on any capital gains at the time of closing, unless the Seller is exempted from the tax.  With this revised form, the Seller (unless exempted) will be subject to the payment of the capital gains withholding at Time of Closing.  If completed correctly, Seller will be subject to a 6.6% (8.7% if Seller is a “C” Corp.) withholding to be based on the net proceeds of the transaction (sales price, less settlement expenses, less lien payoffs).

We advise all Sellers to seek competent financial and/or legal advice on how this form will need to be completed at time of closing.

Contact Us at or 302-344-9002 and we will send you a copy of the new Form 5403 and instructions.