Taxes on Selling a House in Pennsylvania

Capital gains tax

You’ve likely heard the term “capital gains tax,” but what is it?

When you sell a capital asset, like a house, car, or even investments such as stocks or bonds, any profit you make from the sale is generally considered a capital gain. In most cases, your home is the biggest capital asset you’ll ever own, but things like artwork and other valuable property can also fall into this category.

A capital gains tax is a tax you may have to pay on the profit you make from selling a capital asset during the tax year. For example, if you purchased your Pennsylvania home for $315,000 and sold it a few years later for $415,000, you have earned a capital gain of $100,000, which would be taxed.

Capital gains tax rates differ by state. Some states, like Florida, don’t even have a capital gains tax. In Pennsylvania, the tax rate for capital gains is a flat 3.07%. This fixed rate applies to capital gains just like regular income and doesn’t change based on how long you owned the asset or your income level.

Meanwhile, at the federal level, capital gains are classified as “short-term” or “long-term”.

2026 capital gains tax brackets

The 2026 capital gains tax brackets determine the rate applied to any taxable gain from your home sale. Understanding where you fall can help you plan and protect more of your proceeds.

2026 short-term capital gains tax brackets

2026 long-term capital gains tax brackets

It’s also possible to have your capital gains excluded at the Federal level, assuming you qualify. The maximum amount of capital gain that can be excluded is $250,000 for single filers, and $500,000 for a married couple that is filing jointly.

According to the IRS Publication 523, you must meet these criteria: 

If you don’t fit any of the above criteria, you may still qualify for a partial exclusion. Circumstances such as moving for a job, managing a health problem, or having to sell the property of a parent who passed away, among others, can qualify you. For more, please refer to IRS Publication 523.

How to report your Pennsylvania capital gains taxes

• For your federal return, report your capital gains and losses by using the U.S. Individual Income Tax Return (IRS Form 1040) and Capital Gains and Losses, Schedule D (IRS Form 1040).
• For your Pennsylvania capital gains, use PA Schedule D.

Transfer tax

Aside from capital gains tax, Pennsylvania home sellers may also need to account for transfer taxes when selling a home. These are fees charged when property ownership is transferred from one person to another. Transfer tax, also known as documentary stamp tax, recordation tax, or grantor’s tax, is usually based on the home’s sale price.

In Pennsylvania, there’s a 1% transfer tax on the price of the home when it’s sold. So, if your home sells for $315,000, you’d pay about $3,150 in transfer taxes. Typically, both the buyer and seller share this tax, though they can agree on a different split.

Property tax

Property tax is an annual fee homeowners pay based on the assessed value of their property. Like other taxes, the amount you pay can vary depending on where you live and how much your home is worth.

Pennsylvania’s effective property tax rate on owner-occupied housing value is typically 1.26%. State taxes are paid by the calendar year, due on April 15. The Pennsylvania Department of Revenue can provide more information about taxes specific to your city or town here.

Inheritance tax

In Pennsylvania, if you inherit property, you may have to pay inheritance tax. Direct descendants and lineal heirs pay 4.5% of the property value, siblings pay 12%, and all other heirs pay 15%. Meanwhile, transfers to a surviving spouse or from a child 21 or younger to a parent aren’t taxed at all.

If you decide to sell the inherited home, the concept of a “stepped-up basis” comes into play. The stepped-up basis means the home’s cost basis for tax purposes is set at its fair market value on the date you inherited it, not what the original owner paid. This can significantly reduce capital gains tax if you sell the home soon after inheriting it. Capital gains tax is only applied to the portion of the profit above that stepped-up value.

»Learn more: Want to know exactly how much you’ll walk away with from your home sale? Use our Pennsylvania Closing Cost Calculator to get a personalized estimate of your selling expenses and see your potential proceeds after closing.

Other selling expenses you might encounter in Pennsylvania

Title fees: Title fees typically include a title search and title insurance. Title insurance helps protect both the buyer and lender from potential problems with a home’s title. These issues could include things like forged documents, a previously unknown will, or restrictions on the deed that weren’t discovered during the title search. Who pays the title insurance can vary by state. In Pennsylvania, the buyer usually covers this cost, but the final decision is negotiable and depends on what both parties agree to.

Settlement fees: Also called escrow fees, settlement fees are usually 1% of the home sale value. This lump sum is charged by the title company, escrow company, or attorney handling the closing process. These fees typically cover the costs of preparing final documents, completing the transaction, and distributing payments to the appropriate parties. The exact amount and who pays these fees can vary depending on the agreement between the buyer and seller.

Agent commissions: Historically, sellers paid a total commission of around 5% to 6% of the home’s sale price, which was usually split between the listing agent and the buyer’s agent. But after the National Association of Realtors settlement changed how agent fees are handled, buyers now work directly with their agents to negotiate their own commission costs. For sellers, this typically means paying only their listing agent’s commission, which is often around 2.5% to 3% of the sale price, depending on the agreement.

Need Help Buying or Selling Your Pennsylvania Home?

Need help selling your home? Partner with a trusted, top agent in your Pennsylvania market. We analyze over 27 million transactions and thousands of reviews to find you the best agent for your unique situation.

Find Agent

How to prepare for Pennsylvania real estate taxes

Real estate taxes don’t need to be intimidating, and they don’t need to catch you off guard. There are several ways you can get an idea of what you’ll owe before the time comes to sell your home, and HomeLight is here to help. Here are some final steps to consider: 

• Know your home’s value: Use an online automated valuation model (AVM) tool like HomeLight’s free Home Value Estimator. Having a ballpark idea of what your home might be worth can help you calculate the potential capital gains from the home sale.
• Save the right documents: Know what tax documents you will need to sell before doing so. Consult with your tax professional about the federal and state documents needed in Pennsylvania and the tax breaks you might qualify for.
• Find a top agent: An experienced real estate agent can guide you through the home sale process, help you understand your tax burden, and maximize your profits. Our data shows that the top 5% of real estate agents across the U.S. sell homes for 10% more than the average real estate agent.

HomeLight makes it easy to find top real estate agents in your market. From our Agent Match tool to innovative programs like Simple Sale and Buy Before You Sell, we have you covered when it comes to selling your home, ensuring every transaction is simple, certain, and satisfying.  

Header Image Source: (sepavone/ Depositphotos)

Editor’s note: This post is for educational purposes only, not financial, tax, or legal advice. HomeLight recommends consulting an advisor for guidance tailored to your situation.