How to Fill Out Delaware Form 5403: Exemptions, Gain, and Payment

Delaware Form 5403 is the real estate tax return that every seller of Delaware property must hand to the county Recorder of Deeds when the deed is recorded. The Recorder will not record the deed without it. Filing the form is universal, but paying money with it is not: nonresident sellers generally owe an estimated income tax on the gain (6.6% for most filers, 8.7% for C corporations), while Delaware residents and several other categories check an exemption box and owe nothing at recording.¹

Who Files and Who Actually Pays

Every person or entity that transfers Delaware real estate has to complete Form 5403 and present it at recording. That covers individuals, revocable living trusts, corporations, estates, business trusts, partnerships, S corporations, and LLCs. If more than one seller is on the deed, each one files a separate form. Spouses filing jointly are the exception and share a single form under the primary taxpayer’s information.²

Whether you owe money with the form is a separate question. Under 30 Del. C. § 1126, a nonresident individual selling Delaware real estate must pay estimated income tax to the Division of Revenue at the time of recording.³ Nonresident pass-through entities face a parallel requirement under 30 Del. C. § 1606 and remit estimated tax on behalf of each nonresident member based on that member’s share of the gain.⁴

Exemptions That Let You Skip the Tax Calculation

Several categories of sellers file the form but check an exemption box in Section 5 and stop there. If any of these apply, complete the identifying information at the top and leave the calculation sections blank.

Resident sellers. A resident individual, pass-through entity, or corporation checks the residency box and owes nothing at recording. You still report the gain on your annual Delaware return.
Sales that qualify for nonrecognition under federal or Delaware law, such as a like-kind exchange under IRC § 1031.
Sales where the gain is excluded from income for the year of the sale. The most common case is the federal Section 121 exclusion for selling a primary residence.
Foreclosure transfers, including a deed in lieu of foreclosure.
Installment sales. Check the box in Section 7 instead. No tax is due at recording, but you must report and pay Delaware tax on the gain as you recognize it in each future tax year.²

If none of these fit, you are almost certainly a nonresident with a taxable gain, and you complete the full form.

Filling Out the Form Section by Section

Download the current version from the Delaware Division of Revenue’s personal income tax forms page at revenue.delaware.gov.⁵ The form has eight sections.

Section 1: The Property

Enter a description and street address, the tax parcel number, and the county — New Castle, Kent, or Sussex. Get the parcel number from your property tax bill or your county’s online parcel search. A wrong number can hold up recording.¹

Section 2: Entity Type

Check the box that describes the seller: individual or revocable living trust, corporation, trust or estate, business trust, partnership, S corporation, LLC, or other (a government agency or nonprofit, for example).

Section 3: How You Acquired the Property

Purchase, inheritance, gift, or other.

Section 4: Seller Information

Your name, Social Security number or EIN, and mailing address after settlement. One name and one taxpayer ID per form. Multiple sellers file separate forms unless they are spouses.²

Section 5: Exemption Boxes

If any exemption above applies, check the appropriate box here and skip Sections 6 through 8.

Section 6: Calculating the Gain and the Tax

Non-exempt sellers work through the calculation:

Line 6a. Total sales price.
Line 6b. Selling expenses, including brokerage commissions, legal fees, transfer taxes, and other costs that reduce the proceeds.
Line 6c. Subtract 6b from 6a to get the net sales price.
Line 6d. Adjusted basis. Start with what you paid for the property, add non-deductible closing costs and the cost of permanent improvements, then subtract any depreciation you previously claimed.
Line 6e. Subtract 6d from 6c for the total gain.
Line 6f. Multiply the gain by 8.7% if you are a C corporation, or by 6.6% for all other sellers. That is the estimated Delaware income tax due.¹

The 6.6% rate matches Delaware’s top marginal personal income tax bracket, which applies to taxable income above $60,000.⁶ The 8.7% rate matches Delaware’s corporate income tax rate.⁷ These rates apply to the full gain regardless of your overall income. You are paying at the top rate as an estimate, and any overpayment is sorted out on your annual return.

Section 7: Installment Sales

Check this box if you are reporting the gain under the installment method, and leave Section 8 blank.

Section 8: Payment Due

Enter the amount from Line 6f. That is the check you hand over at the Recorder’s office.

Where to Submit It

Form 5403 goes to the Recorder of Deeds in the county where the property sits — New Castle, Kent, or Sussex. You present it with the deed at the time of recording. There is no separate mailing address or electronic portal. The Recorder will not record the deed until the form and any required estimated tax payment are in hand.¹

Make the estimated tax check payable to the Delaware Division of Revenue. In practice, the closing attorney or settlement agent handles this at the table, withholding the amount from the seller’s net proceeds. If the sale does not generate enough net proceeds to cover the estimated tax, which happens in short sales and heavily leveraged deals, the Recorder can accept the form without payment as long as the closing attorney confirms in writing that no funds were available and none were distributed to the seller.⁴

Form 5403 is separate from your deed recording fee and separate from the Delaware realty transfer tax, which typically runs 4% of value split between buyer and seller. Confirm the recording fee with your county and expect the transfer tax to be handled on its own line at closing.⁸⁹

Claiming the Payment on Your Annual Return

The estimated tax you pay with Form 5403 is a prepayment, not a final settlement. When you file your annual Delaware income tax return for the year the sale closed, report the transaction and claim the Form 5403 payment as estimated tax already paid. If your actual tax on the gain comes in below 6.6% because deductions reduce the taxable amount or your effective rate is lower, you receive a refund of the difference.

Attach a copy of the Form 5403 to your annual return so the Division of Revenue can match the prepayment to your account. Nonresident pass-through entities filing composite returns for their members do the same, including the form copy and reporting estimated real estate taxes paid on the appropriate line.

1
Delaware Division of Revenue. Delaware Form 5403 Real Estate Tax Return Declaration of Estimated Income Tax Instructions
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Delaware Division of Revenue. Delaware Form 5403 Real Estate Tax Return
3
Justia. Delaware Code Title 30 – 1126 – Withholding of Income Tax on Sale or Exchange of Real Estate by Nonresident Individuals
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Delaware Code Online. Delaware Code Title 30 Chapter 16 Subchapter I
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Division of Revenue – State of Delaware. Personal Income Tax Forms Current Year (2025-2026)
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Division of Revenue – State of Delaware. Tax Rate Changes
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Division of Revenue – State of Delaware. Corporate Income Tax FAQs
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Sussex County. Recorder of Deeds Fee Schedule
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State of Delaware. Transfer Tax Rate