The Delaware 5403 form is a crucial document used for declaring estimated income tax related to real estate transactions in Delaware. This form must be completed for all property conveyances and presented at the time of recording to ensure compliance with state tax regulations. Understanding how to fill out this form accurately is essential for both buyers and sellers in the real estate market.
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The Delaware Form 5403 is an essential document for anyone involved in the transfer of real estate within the state. This form must be completed for all property conveyances and presented at the time of recording the deed. It captures key details about the property being transferred, including its description, address, and tax parcel number. The form also identifies the transferor or seller, which can be an individual, corporation, trust, or other entity. The method of acquisition—whether by purchase, gift, inheritance, or other means—must be indicated. Additionally, the form requires the seller's name, Social Security Number or Employer Identification Number, and a mailing address for correspondence. Depending on the circumstances, the transferor may check specific boxes related to tax withholding, exemptions, and the method of reporting any gains. For those who need to calculate tax obligations, the form provides sections for computing the total sales price, selling expenses, net sales price, and the Delaware tax due. This ensures that all parties understand their responsibilities and comply with state tax laws when transferring real estate.
When filling out the Delaware 5403 form, it is essential to follow specific guidelines to ensure accuracy and compliance. Here are four things to do and not to do:
2012
REAL ESTATE TAX RETURN
DECLARATION OF ESTIMATED
Delaware Division of Revenue
INCOME TAX
820 N. French Street, P.O. Box 8735
Wilmington, Delaware 19899-8735
FORM 5403
DO NOT WRITE OR STAPLE IN THIS AREA
Form 5403 must be completed for all conveyances and must be presented at the time of recording.
1.Description and address of property transferred (include property tax parcel number):
Tax Parcel Number:
2.Transferor/Seller is:
Individual or Revocable Living Trust
Corporation
Trust or Estate
Business Trust
Partnership
S Corporation
Limited Liability Company
Other
Date of Transfer:
(Month/Date/Year)
3.Transferor or Seller Acquired Property By:
Purchase
Gift
Inheritance
1031 Exchage
Foreclosure/Repossession
Other:
4.Transferor/Seller’s name; SSN or EIN; and address to which correspondence is to be mailed after settlement. (Enter only one name and SSN or EIN per return. If more than one transferor/ seller, use separate forms for each; however, if Transferors/ Sellers are spouses, enter only the primary taxpayer name and SSN, and only file one return. If transferor/seller is not an individual, list only EIN of non-individual transferor/seller and file only one Form 5403 for such transferor/seller – no Form 5403 should be filed for the members, partners, stockholders, trustees or other individuals or entities having an ownership interest in any such non-individual transferor/seller.)
Enter Social Security Number
or
Employer Identification Number of the Transferor/Seller
Name of Transferor/Seller
Address
City
State
Zip Code
5. If applicable, check appropriate box. (Check no more than one box.)
Transferor/seller is a resident (a) individual, (b) pass-through entity or (c) corporation, and not subject to withholding under 30 Del. C. §§1126, 1606 or 1909;
Sale or exchange exempt from capital gain recognition;
Gain realized excluded from income for tax year of sale or exchange;
Sale or exchange occurred on or before December 31, 2010;
Transferor/seller has insufficient information to determine if sale or exchange is subject to withholding. By checking this box, transferor/seller understands that once sufficient information is available, payment of tax may be due and the appropriate return must be timely filed.
If any box in Section 5 is checked, DO NOT complete Sections 6, 7 and 8 below. No payment is due at this time.
6.Computation of Payment and Tax to be Withheld. (See Instructions)
a. Total sales price
a.
b. Less selling expenses
b.
c. Net sales price (Subtract Line b from Line a)
c.
d. Adjusted basis of property
d.
e. Total gain (Subtract Line d from Line c)
e.
f. Cash Payments (not including payments in Line b above)
f.
g. Net Cash Received (Subtract (Line f from Line c)
g.
h. Delaware Tax Due (Multiply either Line “e” or “g” by 6.75%)
h.
$
7.
Check box if the transferor/seller is reporting gain under the installment method. No Tax is payable at this time.
Note: If completing this section you must report and remit any capital gain tax to the State of Delaware when any capital gain as a result of the sale of this property is recognized for Federal Tax Purposes.
8. Delaware Income Tax Paid. (See Instructions.) $
Under penalty of perjury, I declare that I have examined this return and to the best of my knowledge and belief, it is true, correct and complete. If prepared by a person other than the transferor/seller, the declaration is based on all information to which the preparer has any knowledge. Transferor/Seller, Please sign and print full name and title (if any):
Signature
Name
Title
INSTRUCTIONS FORM 5403
REAL ESTATE TAX RETURN REALTY TRANSFER TAX RETURN
Every non-resident individual, pass through entity or corporation who makes, executes, delivers, accepts, or presents for recording any document, except those exemptions defined or described in Sections 1126, 1606 and 1909 of Title 30, or in whose behalf any document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction or any part thereof, a Real Estate Tax at the rate of 6.75% of the value of the gain on the property sold as represented by such document, which tax shall be payable at the time of making, execution, delivery, acceptance or presenting of such document for recording. Said tax is to be paid by the Transferor(s)/Seller(s).
SPECIFIC INSTRUCTIONS
LINE 1. Enter a description and address of the property transferred/ sold, including the tax parcel number and date of transfer. If you need to describe transfer issues please do so here.
LINE 2. Check the appropriate box to indicate whether the Transferor/Seller is an Individual or Revocable Living Trust, a Corporation, Trust or Estate, Business Trust, Partnership, S Corporation, Limited Liability Company, or Other, such as a Government Agency or Non-Profit Corporation.
LINE 3. Check the appropriate box to indicate how the transferor/ seller acquired the property.
LINE 4. Enter the Transferor/Seller’s name; SSN or EIN; and address to which correspondence is to be mailed after settlement. (Enter only one name and SSN or EIN per return. If more than one transferor/ seller, use separate forms for each; however, if Transferors/Sellers are husband and wife, enter only the primary taxpayer name and SSN, and only file one return. If transferor/seller is not an individual, list only EIN of non-individual transferor/seller and file only one Form 5403 for such transferor/seller – no Form 5403 should be filed for the members, partners, stockholders, trustees or other individuals or entities having an ownership interest in any such non-individual transferor/seller.)
LINE 5. Check the appropriate box to indicate if the transferor(s)/ seller(s) are resident individuals, pass-through entities or corporations that are not subject to real estate tax capital gain withholding; the sale or exchange is exempt from capital gain recognition because of either Federal or Delaware exemption; the gain realized will be excluded from income for tax year of sale or exchange; the sale or exchange occurred on or before December 31, 2010; or the transferor(s)/seller(s) has/ have insufficient information to determine if sale or exchange is subject to withholding. By checking the last box, the transferor(s)/seller(s) understands that, once sufficient information is available, payment of tax may be due and the appropriate return must be timely filed. If any of the above boxes in Section 5 are checked, stop here, do not complete Sections 6, 7 and 8 below, and no payment is due at this time. Be sure to only check one box.
LINE 6. On line “a” enter the ‘Total Sales Price’.
On line “b” enter the ‘Selling Expenses’.
On line “c” enter the ‘Net Sales Price’ by subtracting line “b” from line “a”.
On line “d” enter the ‘Adjusted Basis’. “Adjusted basis,” includes mortgages used to buy, construct or substantially improve the real estate, liens as well as the taxpayer’s investment in the property.
On line “e” enter the ‘Total Gain’ by subtracting line “d” from line “c”. This is the transferor’s/ seller’s capital gain for both Federal and Delaware State tax purposes.
On line “f” enter the total Cash Paid at the time of transfer or sale, not including any cash payments reported on line b.
On line “g” enter the ‘Net Cash Received’ by subtracting line f from line c.
The transferor/ seller may elect either Line e or Line g to calculate the ‘Delaware Tax Due’.
On line “h” enter the ‘Delaware Tax Due’ by multiplying either line “e” or line “g” by 6.75%. This is the amount of real estate tax payment due to the Delaware Division of Revenue that you must remit with this form unless line 7 is completed. If you elected line g to make the calculation the transferor(s)/seller(s) may owe additional Delaware Income Tax. If owed this tax is due at the time the next Quarterly Estimated Tax Payment is due.
LINE 7. If the transferor(s)/seller(s) is/ are reporting gain under the installment method no payment is due at this time, but by law you must report and remit any capital gain tax to the State of Delaware when any capital gain as a result of the sale of this property is recognized for Federal Tax Purposes.
LINE 8. Enter the amount of Delaware Tax Due from Line 6(h), unless you completed Section 7. This is the amount payable to the Delaware Division of Revenue.
The Transferor/Seller must sign Form 5403, print their full name and title, if any. This form and the estimated income tax, if any, reported due and payable on this form must be remitted with the deed to the Recorder’s Office before the Recorder shall record a deed conveying title in Delaware real estate. The tax returns or reports and the amounts of tax collected pursuant to Title 30 of the Delaware Code, Sections 1126, 1606 or 1909, and the Recorder’s Office and its employees or agents, shall be subject to the secrecy provisions and penalties of Title 30 of the Delaware Code, Section 368.”
(Revised 12/22/11)
The Delaware Form 5403 is similar to the IRS Form 1099-S, which is used to report the sale or exchange of real estate. Both forms require details about the property being transferred and the parties involved. They also serve the purpose of ensuring that any capital gains tax due on the sale is reported and paid. While Form 5403 is specific to Delaware, Form 1099-S is a federal requirement that applies across the United States, making it essential for sellers to be aware of both forms when completing a real estate transaction.
Another document that resembles the Delaware Form 5403 is the IRS Form 8949, which is used for reporting sales and other dispositions of capital assets. Like Form 5403, Form 8949 requires the seller to provide information about the asset, the date of acquisition, the date of sale, and the gain or loss realized. Both forms aim to capture the financial details necessary for tax reporting, ensuring that the appropriate taxes are assessed based on the gains from the sale of the property or asset.
The Delaware Form 5403 also shares similarities with the state-level property transfer tax forms used in other states, such as California's Form BOE-100. These forms require information about the property being transferred, the parties involved, and the tax implications of the transfer. Each state has its own regulations and tax rates, but the overall purpose remains consistent: to document the transfer of property and ensure that the appropriate taxes are collected.
Form 5403 is akin to the IRS Form 6252, which is used for reporting installment sales. Both forms address situations where the seller receives payments over time rather than a lump sum. They require the seller to report the gain on the sale in a way that reflects the payments received in each tax year. This is important for tax compliance, as both forms ensure that taxes are paid as income is recognized over the term of the installment agreement.
The Delaware Form 5403 is also comparable to the HUD-1 Settlement Statement, which outlines the final details of a real estate transaction. While the HUD-1 focuses on the closing costs and the distribution of funds, it also serves to document the sale and can include information relevant to tax reporting. Both documents are essential in the transaction process, ensuring transparency and compliance with tax obligations.
Additionally, the Delaware Form 5403 resembles the IRS Form 1040 Schedule D, which is used for reporting capital gains and losses. Both forms require the seller to calculate their gain or loss from the sale of property. The information provided on Form 5403 can feed into the calculations on Schedule D, as both forms are integral to accurately reporting income and ensuring compliance with tax laws.
Another similar document is the IRS Form 4797, which is used to report the sale of business property. Like Form 5403, Form 4797 requires the seller to provide details about the property, the sale price, and any gains or losses incurred. Both forms help ensure that the seller meets their tax obligations, particularly when it comes to reporting gains from the sale of real estate or business assets.
Understanding the various forms related to real estate transactions is crucial for compliance and accurate reporting. For instance, if you're operating within Texas and need to address an illegal activity regarding property transactions, you may consider utilizing a Texas Cease and Desist Letter. This document serves as a formal means to demand action cessation before legal proceedings. To find the necessary template for this, you can check out All Texas Forms which provides comprehensive resources for filling out the letter effectively.
The Delaware Form 5403 is also comparable to the state-specific real estate transfer tax forms used in New York, such as the TP-584. These forms require similar information regarding the property being transferred, the parties involved, and the calculation of taxes due. Both forms serve to ensure compliance with state tax laws and facilitate the proper recording of real estate transactions.
Finally, the Delaware Form 5403 can be likened to the IRS Form 1041, which is used for reporting income for estates and trusts. If a property transfer occurs as part of an estate settlement, both forms may come into play. They require similar information about the transferor and the property, ensuring that any tax implications are addressed appropriately for the estate or trust involved.
Incomplete Property Description: Failing to provide a full description of the property, including the property tax parcel number, can lead to delays or rejection of the form.
Incorrect Transferor/Seller Type: Selecting the wrong category for the transferor/seller (e.g., individual vs. corporation) can result in incorrect tax calculations and potential penalties.
Missing SSN or EIN: Not including the Social Security Number (SSN) or Employer Identification Number (EIN) of the transferor/seller will cause processing issues. Only one SSN or EIN should be entered per return.
Improper Box Selection: Checking more than one box in Section 5 can lead to confusion and may require resubmission of the form. It's crucial to select only one applicable box.
Errors in Tax Calculation: Miscalculating the total sales price, selling expenses, or net cash received can result in incorrect tax amounts being reported, leading to potential fines.
Neglecting to Sign the Form: Failing to sign the form or not providing the full name and title of the transferor/seller will render the form invalid and may delay the recording process.
Forgetting to Remit Payment: Not including the required payment with the form, when applicable, will prevent the deed from being recorded. Always ensure that the tax due is calculated and paid as needed.
The Delaware 5403 form is an essential document for real estate transactions in Delaware. When completing this form, several other documents may also be required to ensure compliance with state regulations. Below is a list of commonly used forms and documents that accompany the Delaware 5403.
Understanding the purpose of each document is crucial for a smooth real estate transaction. Ensuring that all required forms are completed accurately can help avoid delays and legal issues down the line. Always consult with a qualified professional when navigating these processes.
Filling out the Delaware 5403 form is a crucial step in the process of transferring real estate. This form must be completed accurately to ensure compliance with state regulations. Once you have gathered the necessary information, follow these steps to fill out the form correctly.
After completing the form, ensure that it is submitted along with any required payments to the appropriate office. This step is vital to finalize the real estate transaction and comply with Delaware tax regulations.
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When completing the transaction for a vehicle in Texas, it is important to utilize the Texas Motor Vehicle Bill of Sale form, which can be obtained at smarttemplates.net/fillable-texas-motor-vehicle-bill-of-sale/. This document not only serves as a formal record of the sale but also facilitates the legal transfer of ownership, ensuring that both buyer and seller have a clear understanding of the terms involved.
Does Delaware Tax Social Security Benefits - Payments should not be stapled to the return to avoid processing issues.