The PA Transfer Tax: A Quick Guide to Pennsylvania Transfer Taxes
- Published on
- 4 min read
-
Joseph Gordon EditorClose
Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you plan to sell your home in Pennsylvania, you need to understand all the financial implications, including real estate transfer taxes.
Transfer taxes are fees imposed by local, state, or county governments when property ownership is transferred between people or entities. Our guide will explore how the PA transfer tax works and explain who pays for what, how it works, and much more.
Whether you’re a first-time seller or a seasoned homeowner, this guide will give you the answers you need to sell your home confidently.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Pennsylvania area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Real estate transfer taxes are levied by state or local governments when property ownership is transferred from one individual to another. According to the Federal Trade Commission, this tax applies whenever the title of a property—essentially the official rights to ownership—changes hands.
The amount will depend, as they can vary greatly by municipality.
These taxes can be invaluable in local and state economies, as they help generate revenue that funds various public services.
Who pays for transfer taxes?
In Pennsylvania, real estate transfer taxes are owed individually by both the buyer and seller (or grantor and grantee).
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in Pennsylvania.
Pennsylvania levies its real estate transfer tax at a rate of 1% on the value of real estate (including contracted-for improvements to property) transferred by deed, instrument, long-term lease, or other writing.
State transfer taxes
Pennsylvania realty transfer tax is collected statewide at a rate of 1% of the property’s sales price.
Visit the PA Department of Revenue’s Realty Transfer Tax Forms page to access the Realty Transfer Tax Statement of Value forms from the state.
County transfer taxes
For Bucks County, there is a Transfer Tax of 2% (1% to the state and 1% to the municipality and school district) for all property sales in Pennsylvania on the value of the property or interest being conveyed. This value is not necessarily the sales price. The 2% Transfer Tax is paid at the time of recording.
City transfer taxes
The current rates for the Realty Transfer Tax in Philadelphia are calculated at 4.278% of the property’s sale price or assessed value, along with any assumed debt. If there is no sale price, the tax is calculated using a formula based on the property value determined by the Office of Property Assessment (OPA).
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect when it comes to the pros and cons selling a h0use without a realtor.
Transfer tax exemptions
Some Pennsylvania sellers might be eligible for a transfer tax exemption. Here are a few examples:
- Transfers among family members, including both gifts and sales of property.
- Transfers to governmental units or between religious organizations.
- Transfers to shareholders or partners, as well as to and from nonprofit industrial development agencies.
- Deeds to burial sites.
- Certain transfers that involve ownership changes in real estate companies and farms.
- Property passed through testate (with a will) or intestate (without a will) succession.
Are transfer taxes deductible?
Unfortunately, transfer taxes cannot be deducted on your income tax return. However, they may still help reduce your tax liability in another way.
When calculating capital gains—the profit made from selling your property—you can treat transfer taxes as part of your selling costs. According to the IRS guidelines, these costs can be subtracted from the home’s sale price, which lowers the taxable profit from the sale. This can help reduce the amount owed in capital gains taxes, easing some of the financial burden of selling your home.
Estimating transfer taxes for your home sale
To get a quick estimate of what you might earn from selling your home in Allegheny County, try HomeLight’s Net Proceeds Calculator. This tool factors in essential costs like transfer taxes, agent fees, and potential renovations, helping you gauge your overall financial outcome.
For a more detailed assessment of transfer taxes and other closing costs, consulting a top real estate agent is highly recommended. A knowledgeable agent can explain how transfer taxes apply to your sale and even help you navigate negotiations, as these costs are sometimes shared or adjusted depending on the market. Starting these conversations early with your agent ensures you’re fully prepared for the financial aspects of closing your sale.
Header Image Source: (sepavone/ Depositphotos)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
