Rental Property Taxes in Delaware (2026 Guide)

1. Property Tax: Among the Lowest in the Nation

Delaware has no state property tax. Real property is taxed only by the three counties (New Castle, Kent, Sussex) plus local school districts and municipalities, and the rates are some of the lowest in the United States — a statewide effective rate of roughly 0.55%, with Sussex County near the bottom of every national ranking. For a landlord, that means the carrying cost of holding a Delaware rental is unusually light.

2. State Income Tax (Up to 6.6%)

Delaware levies a graduated personal income tax that starts from your federal adjusted gross income. Per the Division of Revenue, rates run from 2.2% up to a top rate of 6.6% on taxable income over $60,000 — your net rental income flows onto the Delaware return through that federal-AGI starting point.

• Federal AGI is the starting point — Delaware conforms to it and to the federal definition of itemized deductions, so an accurate federal Schedule E drives an accurate Delaware return.
• Top rate 6.6% applies to income of $60,000 or more; lower brackets (2.2% to 5.55%) apply below that.
• SheltrIQ computes the exact liability across the graduated brackets — you do not estimate it by hand.

3. Capital Gains on a Sale

Delaware has no separate capital-gains rate or preferential deduction — a gain on the sale of a rental is taxed as ordinary income at the same graduated rates, up to 6.6%. Because Delaware starts from federal AGI, the capital gain that lands in your federal AGI carries into the Delaware base. Plan a disposition year for the full ordinary-rate hit, and remember the 4% transfer tax below applies on top of the income tax.

4. Bonus Depreciation: Delaware Conforms

Good news for Delaware landlords: the state conforms to federal bonus depreciation under §168(k). Because the Delaware individual return begins at federal AGI and has no add-back for accelerated or bonus depreciation, the bonus you claim on your federal return flows through to Delaware automatically. There is no separate Delaware depreciation basis to track and no reconciling schedule — a real simplification versus add-back states.

5. Realty Transfer Tax: 4% (Among the Highest)

This is Delaware's biggest landlord gotcha. The state imposes a realty transfer tax of 4% of the property's value — one of the highest in the nation (30 Del. C. §5402). The statute sets a 3% state rate that drops to 2.5% state wherever the county or municipality has enacted its full 1.5% local tax — which virtually all of Delaware has, producing the combined 4%.

• Combined 4% = 2.5% state + 1.5% county/municipal under §5402(a).
• Typically split 2% buyer / 2% seller by custom, but the split is negotiable in the contract — confirm who pays before closing.
• On a $400,000 purchase that is $16,000 of transfer tax — a material acquisition and disposition cost to model into any Delaware deal.

6. LLC Annual Tax: Flat $300

A Delaware LLC owes a flat $300 annual LLC tax, due June 1 each year (DE Division of Corporations). Unlike Delaware corporations, an LLC does not file an annual report — the $300 is the whole obligation. It is a fixed cost regardless of income or number of members, so factor $300 per LLC per year into a single-member or series-of-LLCs holding structure.

7. Rent Control

Delaware has no statewide rent control, and no Delaware municipality currently imposes rent caps on residential property. You set and raise rents at market, subject only to the notice requirements of the Landlord-Tenant Code (25 Del. C. Ch. 51–59).

8. Security Deposit Rules

• One-month cap on longer leases — no landlord may require a security deposit in excess of 1 month's rent where the rental agreement is for 1 year or more (25 Del. C. §5514).
• Return within 20 days of the rental agreement's expiration or termination.
• Itemized list required — within those 20 days you must give the tenant an itemized list of damages and estimated repair costs, and tender the difference; failing to do so is treated as an acknowledgment that no deductions are due, and wrongful withholding exposes you to double damages.

9. How SheltrIQ Helps Delaware Landlords

Delaware rewards accurate federal numbers and a clear eye on transaction costs — SheltrIQ handles both:

• Graduated-rate income modeling — computes your exact Delaware liability across the 2.2% to 6.6% brackets from a federal-AGI base.
• Full bonus-depreciation pass-through — because Delaware conforms to §168(k), SheltrIQ carries your federal bonus depreciation straight to the state with no add-back to reconcile.
• Transfer-tax and disposition modeling — folds the 4% realty transfer tax into acquisition and sale projections so a Delaware deal's true cost is on the table up front.
• AI Schedule E classification — sorts each expense to the right line so the federal AGI that drives your Delaware return is accurate.