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Rental property LLCs in Delaware

Yes, you can hold a Delaware rental in an LLC. You file a $110 Certificate of Formation with the Division of Corporations and pay a $400 annual tax by June 1; Delaware has no annual report for LLCs. A deed from you to an LLC you own in the same proportion as the property is exempt from the realty transfer tax, but selling LLC interests later can be taxed like a deed. Cities and beach towns license rentals themselves, short-term rentals owe a 4.5% state lodging tax, and a Delaware LLC that holds property in another state has to follow that state's rules too. Forming the LLC doesn't move your deed or stop a lender's due-on-sale clause.

Last checked 2026-10-25. General information, not legal or tax advice.

Local rental rules come first

Statewide: short-term rental lodging tax. Delaware taxes short-term rentals at 4.5% of the rent on every occupancy, for rental agreements entered into on or after January 1, 2025 (30 Del. C. § 6202; Division of Revenue Short-Term Rental FAQs). A short-term rental is a house, duplex, apartment, condominium or other residential dwelling unit that a tourist or transient guest rents for no more than 31 consecutive nights. Cleaning fees, linen fees, security deposits and municipal taxes are not "rent" for this tax, and a casual rental the owner arranges directly, at rent substantially below market and for no more than 10 nights in aggregate in a calendar year, is excluded (§ 6201(2), (3)). If you book through Airbnb, Vrbo or a similar listing company, only that company collects and remits the tax, and the Division says an owner who rents only through a third-party intermediary needs no state business license even if the municipality requires one. If you book guests yourself, you are the accommodations intermediary: you collect and remit the tax and hold a $25 accommodations intermediary business license, with monthly returns due by the 15th of the following month (§§ 6203, 6204; Division of Revenue FAQs; Technical Information Memorandum 2024-01). Municipal lodging taxes are separate (Division of Revenue FAQs).

Wilmington. The city requires every rental property to be licensed, registered and inspected: an annual Residential Property Rental License (City Code § 5-92), registration of every rental including newly acquired ones, and interior and exterior inspections on a two- or five-year cycle depending on the number of units. If you bought or sold a rental you may have to show proof of the transaction. An owner who doesn't live in New Castle County must retain a property manager who holds both a City of Wilmington and a State of Delaware business license. The first inspection and first re-inspection are free and later re-inspections cost $25 each; failing to get the license, inspection or registration can bring a criminal summons with a fine of up to $1,000 plus costs (wilmingtonde.gov Residential Rental Property Program, How the Program Works and Owner / Manager Responsibility pages). The pages I read don't say how a deed to an LLC is handled or address short-term rentals, so ask the Department of Licenses and Inspections before you transfer.

Dover. A single-family or multiple-family rental needs an annual rental dwelling permit that expires every January 31, and an inspection comes before any new permit (City Code §§ 22-332(b), 22-351). A corporation or partnership owner must have a designated member, partner or employee in charge who lives or has an office in the county, or a licensed property manager or designated individual who lives there (§ 22-333(b)). Owners must carry property insurance and show proof with each application (§ 22-334). Short-term rentals (under 30 days) need their own annual license, which "shall be void upon transfer of ownership" of the property (§§ 22-356(c), 22-357(a), (e)). The owner must be a city resident under the city's voting-residency test and may rent out only the owner's primary residence (§ 22-358(1)). A company has no voting residency, so ask the city before putting a Dover short-term rental in an LLC.

Newark. Every property that isn't owner-occupied but is leased needs a yearly rental permit, and "any change of ownership of a rental property regardless of relationship between the old and new owners requires an updated rental license application" (newarkde.gov Rental Permits). The 2026 fee schedule sets the rental license fee at $234.00 per dwelling unit for single-family and two-family dwellings, $160.00 for townhouse-style apartments and condominium dwellings and $86.00 for units in multifamily buildings of three or more, plus a $5.00 technology fee per license (City of Newark 2026 Fee Schedule). A deed to your LLC is a change of ownership, so apply in the LLC's name.

New Castle County. Any owner of a residential property leased for rent must register it with the county, which describes the program as covering the rental units in unincorporated New Castle County. Registration is free, owners update it by May 1 of each odd-numbered year and must give tenants the county's Tenants Rights Guide, and since January 1, 2025 Ordinance 23-134 has required written verification of garbage and rubbish removal when an owner applies for or renews a rental permit (New Castle County Rental Property Registration).

Rehoboth Beach. No owner may rent a residential rental, of any duration, without a valid residential rental license obtained each year before use. The application names a local contact reachable 24 hours a day, and within 30 days of a change of property ownership, agent or other material facts a new application and fee must be submitted and a new license issued "before the continued operation of the residential rental shall be permitted" (City Code §§ 210-4(B), 210-6, 210-7(G)). Overnight occupancy is capped at two people per bedroom plus two, not counting children under six (§ 210-7(D)), and the owner completes a safety self-certification each year or asks for a city inspection instead (§ 210-7(C)). The city's first-time guide asks for proof of ownership, such as a deed, and a property inspection. Rehoboth also charges a 7% rental tax to owners who rent their homes; the form is mailed December 1 and payment is due February 15 (rehobothbeachde.gov Residential Rental License; Lodging & Rental Taxes).

Dewey Beach. Residential rental owners need a town license and must return a safety certification affidavit each license year; the Town won't issue a rental license without a current one. The license year starts May 1: ongoing renewals are due April 30 and a new license is due before the rental begins (Town Code §§ 117-2, 117-6). The fee is $250 plus $20 for each bedroom over two (§ 117-13), and "each license granted shall not be transferable" (§ 117-11). The Town also taxes rent at 3% for rooms in a hotel, motel or tourist home as defined in 30 Del. C. § 6101, payable by the owner by the 15th of the following month; unpaid tax blocks license renewal (§ 167-20). Ask the Town whether your house falls under that definition.

Lewes. An owner needs a rental license before renting, and "any license issued pursuant to this chapter is nontransferable." The license year is January 1 to December 31, with fees and the prior year's gross receipts rental tax due February 1 (City Code § 150-3). The annual fee is $200 per rental unit, short-term or long-term, and a short-term rental (30 consecutive days or less) must name a local contact who can reach the property within two hours (Lewes Rental Licensing FAQs; § 150-2).

Statewide: the lease. On each written rental agreement the landlord must prominently disclose the names and usual business addresses of all owners of the unit, or the names and business addresses of their appointed resident agents (25 Del. C. § 5105(a)(1)). "Person" under the Residential Landlord-Tenant Code includes any "other legal or commercial entity" (§ 5141), so the lease for an LLC-owned unit should name the LLC. The Code excludes commercial rental units and, for dwellings in Broadkill, Lewes-Rehoboth, Indian River, Baltimore and Cedar Creek Hundreds, nonrenewable rental agreements of 120 days or less in a calendar year (§§ 5101(b), 5102(4)). Elsewhere in Delaware rental rules are local, so ask your town, city and county before the first lease.

What the LLC protects, and what it doesn't

Delaware's LLC Act says that an LLC's debts, obligations and liabilities, "whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company," and that no member or manager is obligated personally for them "solely by reason of being a member or acting as a manager" (6 Del. C. § 18-303(a)). A member or manager can agree in the LLC agreement or another agreement to be personally liable (§ 18-303(b)), so read yours.

  • Guarantees still bind you. A personal guarantee you sign for a lender is your own promise, and § 18-303(b) lets a member or manager agree to be personally obligated.
  • Your own acts are yours. A repair you make yourself, or your own negligence, isn't shielded by the LLC; ask a Delaware attorney.
  • A missed tax doesn't strip the shield, but it has teeth. Members and managers aren't liable for LLC debts solely because the LLC failed to pay its annual tax or lost good standing (§ 18-1107(n)), but an LLC that isn't in good standing can't maintain a court action in Delaware until it is restored (§ 18-1107(l)).
  • Creditors of a member. A judgment creditor of a member may get a charging order, which gives it only the right to distributions, and has no right to the LLC's property, whether the LLC has one member or more (§ 18-703(a), (d), (e)). That is Delaware law; ask an attorney where the property sits whether its courts will apply it.
  • It isn't insurance. The LLC still needs coverage that pays claims and defense costs.

One LLC, or one per property?

Separate LLCs keep one property's judgment away from the others, at $110 to form and a $400 annual tax for each LLC, plus a registered agent for each. Delaware also allows series LLCs in two forms. Under § 18-215 an LLC agreement may set up designated series with separate rights, powers or duties for specified property. A series is a "protected series," whose debts are enforceable against its own assets only, if the agreement says so, the records account for the series' assets separately and the certificate of formation gives notice of the limitation (§ 18-215(b)); a filing for the series itself isn't among those conditions. A "registered series" under § 18-218 is formed by filing a certificate of registered series with the Secretary of State ($110 on the fee schedule) and pays a $100 annual tax per series (§ 18-1107(b)), with the same record-keeping and notice conditions (§ 18-218(a)-(c)). Either kind may hold title to real property in its own name unless the LLC agreement says otherwise (§§ 18-215(b)(1), 18-218(c)(1)). Neither section says how another state treats a series, so ask an attorney in the state where the property sits before relying on one. More: Should you have a separate LLC for each rental property?. Other states: All rental property LLC guides · Maryland · New Jersey · Pennsylvania.

Form it where the property is, or register there

The simplest setup is a Delaware LLC for Delaware property: it needs no foreign registration, only a Delaware registered agent and the annual tax. An LLC from another state registers with the Secretary of State before doing business in Delaware, with a certificate of existence from its home state dated within six months, the registration fee ($200) and a Delaware registered office and agent (6 Del. C. §§ 18-902, 18-904(b), 18-1105(a)(6)). It then owes the same $400 annual tax (§ 18-1107(b)). The Act's list of activities that don't count as doing business covers bank accounts, isolated transactions, and creating or acquiring debt with or without a mortgage, and doesn't mention owning or leasing a rental (§ 18-912), so ask a Delaware attorney before assuming a rental needs no filing. An unregistered foreign LLC can't maintain an action in a Delaware court until it registers and pays its fees and penalties, and owes $200 for each year or part of a year; its contracts stay valid and its members aren't liable solely for not registering (§ 18-907).

A Delaware LLC can also hold property in another state. The state where the property sits decides what that LLC must file there. Texas, for example, says a foreign entity, including a foreign limited liability company, "must register" under its Business Organizations Code to transact business in the state (Tex. Bus. Orgs. Code § 9.001(a)), and Delaware's own rule is the mirror image. You would pay Delaware's $400 annual tax and agent every year on top of whatever the property's state charges a foreign LLC and its own local rental rules, so compare that with forming in the property's state, and read the guide for that state: all rental property LLC guides.

What it costs the state

  • Certificate of Formation: $110 (Division of Corporations fee schedule, revised August 1, 2026; the schedule's figure is the filing fee plus the municipality fee, $70 under 6 Del. C. § 18-1105(a)(3) and $40 under § 18-206(e))
  • Annual tax: $400, due and payable on the first day of June following the close of the calendar year; there is no annual report for LLCs (§ 18-1107(b), (c); Division of Corporations FAQ). A late LLC adds a $200 penalty and 1½% interest per month (§ 18-1107(c), (e))
  • Name reservation (optional): $75 for 120 days (Division of Corporations FAQ; § 18-1105(a)(1))
  • Expedited handling (optional), per document in addition to the filing fee: $50 for 24 hours and $100 same day (fee schedule). One-hour priority service is $1000 and two-hour is $500 per document. A certified copy is $50
  • Registered series (optional): $110 to form (fee schedule) and $100 annual tax per series (§ 18-1107(b))
  • Foreign LLC registration in Delaware: $200 (fee schedule; § 18-1105(a)(6)), plus the $400 annual tax
  • State short-term rental license, only if you book guests without a platform: $25 accommodations intermediary business license (Technical Information Memorandum 2024-01)
  • EIN: free from the IRS

Compare services: LLC services compared.

Forming the LLC, in order

  1. Pick a name that contains "Limited Liability Company," "L.L.C." or "LLC" and is distinguishable from names on the Secretary of State's records (6 Del. C. § 18-102(1), (3)). A $75 reservation holds a name for 120 days.
  2. Name a registered agent and a registered office in Delaware. The agent can be the LLC itself, an individual resident in Delaware, or one of the domestic or foreign entities the statute lists, and its business office must be identical to the registered office (§ 18-104(a)).
  3. File the Certificate of Formation with the Division of Corporations ($110). It must give the LLC's name and the address and name of its registered office and agent, plus anything else the members choose, and the LLC exists when it is filed or at a later stated time (§ 18-201(a), (b)). It doesn't have to name members or managers.
  4. Write an LLC agreement. It can be made before, at or after the filing (§ 18-201(d)).
  5. Get an EIN and open the LLC's bank account.
  6. Calendar the June 1 tax, register or license each rental with the city (above), and, for short-term rentals you book yourself, register for the state lodging tax.

Forming the LLC doesn't move your deed

Putting your rental in the LLC takes a new deed, recorded in the Recorder of Deeds office for the county where the property sits: New Castle, Kent or Sussex (25 Del. C. § 151; Division of Revenue, Realty Transfer Tax).

  • Record it. A deed has priority from the time it is recorded, no matter when it was signed, sealed and delivered (§ 153).
  • Put the LLC's address on the deed. Anyone leaving a deed for record must place on or attach to it the address of the grantee (§ 133).
  • The county charges recording fees. Sussex County charges a $30.00 document surcharge, a $1.00 maintenance fee and $9.00 per page for a deed, plus $30.00 for a document that doesn't meet its recording standards (Sussex County Recorder of Deeds fee schedule, effective July 1, 2024). Check your county's schedule.
  • Transfer tax: state plus local. The state tax is 3 percent of the value of the property, or 2½ percent where the municipality or county has enacted the full 1½ percent local tax, apportioned equally between grantor and grantee; between the parties, absent an agreement, the burden of paying it is on the grantor (30 Del. C. §§ 5402(a), 5412). The Division of Revenue's return instructions use a 4.0 percent total, 2.5 percent to the state and 1.5 percent to the county or municipality (Form RTT-TAX instructions).
  • A deed to your own LLC can be exempt. The tax doesn't reach "any conveyance to or from an entity, where the grantor or grantee owns an equity interest in the entity in the same proportion as the grantor's or grantee's interest in, or ownership of, the real estate being conveyed" (§ 5401(1)n.). If you own the property alone and the LLC alone, the proportions match; if the owners and the members differ, they may not. Expect the paperwork anyway: a document lodged for recording must state its value, or come with an affidavit that gives the value "and the reason, if any, why such document is not subject to tax" (§ 5409), and Part D of the Division's Form RTT-TAX asks you to explain the basis for an exemption and cite the § 5401 section if known. The Sussex County Recorder's town transfer tax sheet applies its town tax steps to both taxable and exempt transactions, so ask the Recorder or the municipality whether the local tax follows the state exemption.
  • Getting out is different. The proportional-ownership exemption "shall not apply to any distribution in liquidation or other conveyance resulting from the partial or complete liquidation of an entity" unless the equity interest has been held for more than 3 years (§ 5401(1)n.).
  • Selling the LLC later can be taxed. Delaware treats a transfer of beneficial ownership in Delaware real estate through intangible interests, such as LLC interests, as a conveyance, and the proportional-ownership exemption doesn't apply to it. The rule doesn't reach a transfer after which the prior beneficial owners still hold 80% or more, and below 80% it applies only if the Secretary of Finance's regulations characterize the transfer as a sale of real property (§ 5401(8); Form RTT-TAX instructions).
  • Rental licenses. Several licenses above end or must be re-applied for when title changes (Dover short-term, Dewey Beach, Lewes, Newark and Rehoboth Beach), so plan for the LLC to apply right after the deed.

Have a Delaware attorney prepare the deed and the transfer tax paperwork. After it records, update leases, rent payment instructions, deposits and insurance, and re-apply for any city rental license in the LLC's name.

Check the mortgage before you transfer

Federal law lets a lender enforce a due-on-sale clause, and a transfer to an LLC isn't one of the exceptions for 1–4 unit homes (12 U.S.C. § 1701j-3(d)). Fannie Mae allows a transfer to an LLC the borrower controls for loans it acquired on or after June 1, 2016 (Fannie Mae Servicing Guide D1-4.1-02). Ask your servicer in writing.

Insurance and taxes

Tell your insurer before title moves. For federal income tax, a single-member LLC is disregarded unless it elects corporate treatment (IRS). For any tax Delaware imposes, an LLC is classified as a partnership unless it is classified otherwise for federal income tax purposes, in which case Delaware follows the federal classification (6 Del. C. § 18-1107(a)). Delaware has no state sales tax, but it taxes the gross receipts of most businesses and requires a state business license for "any person or entity conducting a trade or business" in Delaware (Division of Revenue Business Licenses FAQs). The statute's rental license category is the "commercial lessor," one who leases a commercial unit, meaning space used for purposes other than a dwelling unit or farm unit (30 Del. C. § 2301(a)(6)). The sources I read don't say whether a landlord who rents only dwellings needs a state license, so ask the Division of Revenue before the first lease, especially if a city requires your manager to hold one, as Wilmington does. Short-term rentals add the 4.5% state lodging tax and any town taxes (above).

Keeping each LLC in good standing

  • Pay the $400 annual tax by June 1 every year. The Secretary of State mails the annual statement at least 60 days earlier to the LLC's registered agent (6 Del. C. § 18-1107(d)), so keep the agent's contact details current.
  • A late LLC stops being in good standing, and the Secretary of State won't accept most filings or issue a good standing certificate until it is restored; it can't sue in a Delaware court meanwhile, though its contracts, deeds and mortgages stay valid (§ 18-1107(h), (k), (l), (m)). Restoring it takes the unpaid tax, penalties and interest for every year missed (§ 18-1107(i)).
  • If the tax goes unpaid for 3 years from its due date, the certificate of formation is canceled (§ 18-1108(a)).
  • Keep the registered agent and office current (§ 18-104). A change of agent amendment is $50 on the fee schedule.
  • Renew city licenses on their own clocks: Wilmington every year, Dover by January 31, Newark every year, Lewes with fees due February 1, Dewey Beach by April 30 for the May 1 license year, Rehoboth Beach every year with its rental tax due February 15, and New Castle County registration by May 1 of each odd-numbered year. File state lodging tax returns by the 15th of each month.

Before you file or transfer a property

  • Attorney: the deed, the transfer tax exemption and affidavit, series vs. separate LLCs
  • Servicer and insurance agent: is the transfer allowed? named insured, coverage
  • CPA: state business license question, lodging taxes, federal classification
  • City: rental license or registration in the LLC's name; short-term rental rules
  • Calendar: June 1 each year; city renewals; monthly lodging tax returns

Form it with Corpus

Corpus prepares and files your Certificate of Formation and includes the first year of registered-agent service. The Delaware page shows the current price. Corpus isn't a law firm: the deed and transfer tax paperwork, the loan, taxes and city licenses are separate steps.

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Sources

Last checked 2026-10-25. Corpus is not a law firm and does not provide legal or tax advice.