Update on the Elimination of Redundant Municipal Business Licenses
As a result of HB 235 of 2019, as amended and championed by the Delaware Association of REALTORS®, you are no longer required to obtain business licenses for municipalities that charge a business license fee outside of your brokerage’s physical location.
Please be sure to read this entire document because there are exceptions allowing taxes to be charged.
Per the legislation, as of July 1, 2020, any county, municipality, or other political subdivision of the state is prohibited from imposing local business licensing requirements, fees, or taxes on real estate brokers, associate brokers, brokerage organizations, or real estate salespersons for any of the following activities in that jurisdiction:
- Listing real estate for sale
- Representing buyers in the purchase of real estate
- Rental of real estate for property owners or tenants unless the property is in a city with a population over 50,000 (as of today, the City of Wilmington is the only city that qualifies)
However, if a real estate broker, associate broker, brokerage organization, or real estate salesperson has a physical office in a jurisdiction that charges for business licenses, taxes, or fees, they MAY still be required to pay those fees and taxes on the same basis as other businesses with physical offices in that jurisdiction. Please check with the municipality in which your brokerage’s physical office is located to see if you must pay for a business license.
- Example 1: If you operate a brokerage organization in the Town of Bethany Beach, the Town of Bethany Beach requires a business license at the cost of $250.00. You are required to pay this business license fee as your physical office is located within the Town of Bethany Beach. As a result of the legislation, if your company conducts business in a surrounding municipality, you no longer need to obtain separate licenses for every municipality. You only need a license where your physical office is located.
- Example 2: If you are a real estate broker, associate broker, or real estate salesperson, you MAY still be required to obtain a business license and pay local fees or taxes if your physical brokerage (your real estate license will state your brokerage’s physical address) is within a municipality’s jurisdiction that requires business licenses or charges local fees or taxes. As a result of the legislation, you no longer need to obtain separate licenses in every municipality in which you practice—only within the jurisdiction where your physical brokerage is located IF they require you to have a business license. In addition, a municipality may have ordinances that permit them to charge a wage tax calculated on the same basis as other wages earned in that jurisdiction.
- Example 3: Your office is not in the City of Wilmington, but you handle rentals in the City of Wilmington. You are still required to obtain a City of Wilmington business license and pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City.
- Example 4. You handle sales in the City of Wilmington. You are still required to pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City. This applies whether or not you have a physical office in the City of Wilmington.
Note: The information above is specifically in regard to municipal business licenses, taxes, and fees. The State of Delaware still requires a state business license to operate by “any person or entity conducting a trade or business.” It is very important to note that real estate salespersons are EXEMPT from the state business license requirement at per a 1991 memo from the Division of Revenue. Therefore, the Brokerage organization is still required to obtain a State of Delaware business license. Individual salespeople and associate brokers do not need a State of Delaware business license.
Please understand that many of our local municipalities are aware of this legislation but do not have the capability to automatically take you out of their database. If you paid local business license fees to a municipality in the past, where your physical office is not located today, contact them directly to be removed.
We hope these clarifications make this very clear. Please do not hesitate to contact us directly if you have additional questions or concerns.
The end of the 2021 Legislative Session almost made it —the session extending slightly past June 30 with the gavel dropping only a couple minutes into July 1. While many legislators began going back into Legislative Hall during parts of the session, they ended the year virtually on Zoom.
The $4.77 billion 2022 Operating Budget and $1.3 billion Bond Bill, the largest in the state’s history, were passed and signed by the Governor, along with another $63.2 million for Grant-In-Aid.
The General Assembly is in recess until fall, when they will enter into a special session to begin work on redistricting. Redistricting happens every 10 years following the U.S. census. This year, we may see lower Delaware pick up an additional House seat, and a Senate seat will move from New Castle County to Sussex or Kent County. The second year of the 151st Session will begin in January 2022.
Bills of Interest Passed
- SB 127 – Site Readiness Fund: A fund will be established to provide grants, loans, or other economic assistance to attract new businesses or expand existing businesses.
- HB 112 – DUCIOA: Several technical and typographic errors were corrected in the Delaware Common Interest Ownership Act (the “DUCIOA”) and several noncontroversial changes were agreed upon by stakeholders.
- SB 15 – Minimum Wage: The Delaware hourly minimum wage will gradually increase to $15 by 2025. Other bills were introduced this session to remove the training and youth minimum wage and increase the tipped minimum wage.
- HB 91 – Unfair Trade Practices: Delaware consumers and businesses are provided protection against unfair acts or practices in commerce.
Bills of Interest Opposed
DAR worked with other stakeholders to stop the following bills from becoming law.
- SB 101 – Tenants Right to Counsel: The language in this bill created a right to counsel for tenants in evictions and other landlord-tenant actions as well as a residential eviction diversion program.
- Short-Term Rental Tax: A lodging tax that would apply to all hotels, motels, tourist homes, and short-term rentals was proposed. It would also impose an 11% rate cap on short-term rentals.
Notable Bills That May Re-emerge in 2022
- SB 90 – Source of Income: Both the Delaware Fair Housing Act and Residential Landlord-Tenant Code would be revised to repeal the exception to discrimination based on source of income that allows a landlord to discriminate against tenants who participate in government-sponsored rental assistance programs.
- HB 150 – The Delaware Marijuana Control Act: Marijuana would be regulated and taxed in the same manner as alcohol.
- HB 108 – Senior Real Property Tax Credit: The senior real property tax credit would be restored to the previous amount, increasing from $400 to $500.
- HB 113 – Forthwith Summons: This is a clarification that emergency relief should be granted not only after the harm has been caused but also where the harm is threatened.
- HB 205 – EARNS: The EARNS Program — Expanding Access for Retirement and Necessary Saving would serve as a vehicle through which eligible employees may, on a voluntary basis, provide for additional retirement security through a state-facilitated retirement savings program.
The Delaware Realty Transfer Tax is the highest in the nation. We need your help to roll it back!
National Association of REALTORS Advocacy
Calls for Action
- While the Delaware REALTORS® staff are some of the best in the business, the most effective tool in our advocacy efforts is the voice of each and every one of our members. Make sure your voice is heard on important issues for your business and your clients.
- There are no DE REALTORS® Calls for Action at this time
Are you looking for more information about our advocacy efforts, REALTOR® news, or upcoming events? We’d love to hear from you.