Pennsylvania Real Estate Transfer Tax Explained: What Buyers and Sellers Pay

What Is Pennsylvania’s Real Estate Transfer Tax?

Every time real property changes hands in Pennsylvania, the state and local government collect a transfer tax on the sale. The state portion is 1% of the sale price, split evenly between the buyer and seller (0.5% each, by custom — though the law makes both parties jointly liable for the full amount). Most municipalities and school districts add their own local transfer tax on top of the state tax.

For a typical home sale in Pennsylvania, the total transfer tax ranges from 2% to 4.278% of the sale price depending on location. On a $300,000 home, that’s $6,000 to $12,834 in transfer taxes alone — a significant closing cost that buyers and sellers need to account for in their budgets.

This guide breaks down how the tax works, what exemptions exist, and how it affects your bottom line at closing.

How the Transfer Tax Is Structured

Pennsylvania’s transfer tax has two components:

State transfer tax: 1% of the sale price. This is set by state law and applies uniformly across the commonwealth. By custom, buyers and sellers each pay half (0.5%), though the parties can negotiate a different split.

Local transfer tax: varies by municipality. Pennsylvania law allows municipalities and school districts to impose their own transfer taxes. The local rate typically ranges from 0.5% to 1% of the sale price, split between buyer and seller. In most communities, the total local rate is 1%, making the combined state and local tax 2%.

The total transfer tax is calculated on the sale price or the fair market value of the property, whichever is higher. In most standard sales, the sale price is used.

The transfer tax is collected at closing (settlement) and remitted by the recorder of deeds when the deed is recorded. Your settlement agent or title company handles the calculation and collection.

Philadelphia: A Special Case

Philadelphia’s transfer tax is significantly higher than the rest of the state. The city imposes its own transfer tax in addition to the state tax, resulting in a total rate of 4.278%:

On a $300,000 home in Philadelphia, the total transfer tax is $12,834. By custom, the buyer and seller each pay about half, so each party pays roughly $6,417 at closing. This is dramatically more than the $3,000 each party would pay in a typical 2% municipality.

Philadelphia’s high transfer tax is one reason the city’s closing costs are among the highest in Pennsylvania. If you’re buying in Philadelphia, factor this into your budget from the start. Our closing cost calculator can help you estimate total settlement expenses.

For a full overview of housing costs in Philadelphia, read our Philadelphia relocation guide.

Transfer Tax Rates in Major Pennsylvania Areas

Here’s how total transfer tax rates compare across some of the state’s most active real estate markets:

Note: Local rates vary by specific municipality and school district. Some municipalities have rates slightly above or below 1% for their local portion. Always confirm the exact rate with your settlement agent for the specific property address.

Who Actually Pays the Transfer Tax?

Pennsylvania law makes both the buyer and seller jointly and severally liable for the full transfer tax. This means the state doesn’t care who pays — both parties are on the hook. If one party doesn’t pay, the other is responsible for the full amount.

In practice, local custom and the purchase agreement determine how the tax is split:

• Most common: Split 50/50 between buyer and seller. This is the standard in the vast majority of Pennsylvania transactions.
• Negotiable: The parties can agree to any split as part of their purchase negotiations. In a buyer’s market, the seller might agree to pay a larger share. In a competitive market, the buyer might take on more.
• Specified in the agreement of sale: The standard Pennsylvania Agreement of Sale has a section where the parties designate who pays what portion of the transfer tax.

Your share of the transfer tax is listed on your Closing Disclosure (CD) and factored into your total cash needed at settlement.

Transfer Tax Exemptions

Several types of transfers are exempt from Pennsylvania transfer tax or qualify for reduced rates:

Transfers between spouses: Transfers between husband and wife are exempt from transfer tax, including transfers as part of a divorce settlement.

Transfers between parent and child: Direct transfers between parents and children (including adopted children and stepchildren) are exempt from transfer tax. This exemption also extends to transfers between grandparents and grandchildren.

Transfers to or from a living trust: Transfers to a revocable living trust for estate planning purposes are generally exempt, provided the grantor is also the beneficiary.

Transfers by will or inheritance: Property transferred through a will or by intestate succession is exempt from transfer tax (though it may be subject to Pennsylvania inheritance tax, which is a separate tax).

Transfers by government agencies: Sales by the federal government, state, or local municipalities are exempt.

Transfers for no consideration: Genuine gifts of real property (with no money or other consideration exchanged) may be exempt, though the Department of Revenue scrutinizes these transfers to ensure they’re not disguised sales.

Certain corporate transfers: Transfers within a corporate family (subsidiary to parent, between wholly owned subsidiaries) may qualify for exemption under specific conditions.

Exemptions must be claimed at the time of deed recording. Your settlement agent will ensure the proper exemption documentation is submitted to the recorder of deeds.

First-Time Homebuyer Transfer Tax Reductions

While Pennsylvania does not have a statewide first-time homebuyer transfer tax exemption, some local jurisdictions have offered reduced transfer tax rates or credits for first-time buyers as part of local economic development programs.

Philadelphia, despite its high transfer tax, has periodically offered first-time buyer incentives. The availability and terms of these programs change, so check with the city’s Office of Housing and Community Development for current offerings.

Some Pennsylvania communities also offer transfer tax rebates or credits through Keystone Opportunity Zones (KOZ) or similar economic development designations that encourage investment in targeted areas.

For a broader look at first-time buyer assistance available in Pennsylvania — including down payment grants, subsidized mortgages, and closing cost help — read our first-time homebuyer programs guide.

How Transfer Tax Affects Your Closing Costs

The transfer tax is one of the largest line items on your settlement statement. Here’s how it fits into the full picture of closing costs for a buyer:

In Philadelphia, the buyer’s transfer tax alone on a $300,000 home is about $6,417 — more than doubling this particular line item compared to the rest of the state.

For sellers, the transfer tax is deducted from your sale proceeds at closing. Use our seller net proceeds calculator to see what you’ll take home after transfer tax, agent commissions, and other closing costs.

Transfer Tax vs. Other Real Estate Taxes in Pennsylvania

Pennsylvania has several taxes that apply to real estate. Don’t confuse them:

Transfer tax (this article): A one-time tax paid when property changes hands. Based on the sale price. Collected at closing.

Property tax: An annual tax based on your assessed value, paid to the county, municipality, and school district. Ongoing every year you own the property. Our property tax system explainer covers this in detail.

Pennsylvania inheritance tax: A tax on property and assets transferred after death. Rates: 0% to surviving spouses, 4.5% to lineal descendants (children, grandchildren), 12% to siblings, 15% to others. This is separate from the transfer tax and applies to the decedent’s estate.

Capital gains tax: Federal and state income tax on the profit from selling a home. Homeowners who’ve lived in the property for 2 of the last 5 years can exclude up to $250,000 in gains ($500,000 for married couples). Pennsylvania’s flat income tax rate of 3.07% applies to taxable gains above the exclusion.

Strategies to Reduce Your Transfer Tax Burden

While the transfer tax rate is fixed, there are some legitimate ways to manage its impact:

Negotiate who pays: The 50/50 split is custom, not law. In negotiations, you can ask the other party to cover a larger share. Sellers in a buyer’s market may agree to pay the full transfer tax as a concession.

Claim applicable exemptions: If you’re buying from a family member, verify that the family transfer exemption applies. Transfers between parents and children, grandparents and grandchildren, and spouses are exempt.

Include personal property separately: Items that are personal property (not permanently attached to the real estate) — such as certain appliances, furniture, or equipment — can be allocated separately in the purchase agreement and are not subject to transfer tax. The allocation must be reasonable and reflect actual fair market values. Inflating personal property allocations to avoid transfer tax is fraud.

Roll transfer tax into seller concessions: Buyers can negotiate seller-paid closing costs that include the transfer tax. The seller effectively pays your share through a credit at closing. Your lender must approve this arrangement, and there are limits on how much sellers can contribute (typically 3-6% of the sale price depending on loan type).

Budget for it upfront: The best strategy is simply planning for the transfer tax from the beginning. When calculating how much house you can afford, include transfer tax in your closing cost estimate so it doesn’t catch you off guard. Our affordability calculator helps you plan for the full cost of buying. If your assessment seems too high, see our how to appeal your property tax in Pennsylvania.

Transfer Tax on Refinances and Other Non-Sale Transfers

Some transactions that change the deed trigger transfer tax even though they’re not traditional sales:

Adding a name to the deed: Adding a non-spouse to your deed (such as a business partner or unmarried partner) can trigger transfer tax on the percentage of ownership transferred. Adding a spouse is exempt.

Removing a name from the deed: Similarly, removing a co-owner (other than a spouse in a divorce) can trigger transfer tax.

Corporate transfers: Transferring property into or out of an LLC, partnership, or corporation can trigger transfer tax unless specific exemptions apply. Consult a real estate attorney before transferring property to a business entity.

Refinancing: A standard refinance does not trigger transfer tax because ownership doesn’t change. However, if the refinance involves a new deed (rare), tax could apply.

Deed corrections: Corrective deeds that fix errors in a prior deed (misspelled names, incorrect legal descriptions) generally do not trigger transfer tax, but they must be properly documented as corrections.

How Transfer Tax Revenue Is Used

The 1% state transfer tax revenue goes to the Commonwealth’s General Fund and is used for general state expenditures. Local transfer tax revenue stays in the municipality and/or school district that imposed it, funding local government services and education.

Pennsylvania’s transfer tax is a significant revenue source for local governments, particularly in active real estate markets. This is one reason the tax has remained in place and, in the case of Philadelphia, has increased over time — local governments depend on the revenue.

Frequently Asked Questions

Can the buyer and seller negotiate who pays the transfer tax?

Yes. While the customary split is 50/50, the purchase agreement can specify any arrangement the parties agree to. The seller can pay all of it, the buyer can pay all of it, or they can split it in any proportion. This is a negotiation point like any other term of the deal. In competitive markets, buyers sometimes offer to pay the full transfer tax to sweeten their offer. In slower markets, sellers may agree to pay a larger share as a concession.

Is the transfer tax deductible on my income taxes?

For buyers, the transfer tax is not directly deductible as a tax expense on your federal income tax return. However, the buyer’s share of the transfer tax is added to the cost basis of the property, which reduces your taxable gain when you eventually sell. For sellers, the transfer tax is a selling expense that reduces your proceeds and thus reduces any taxable capital gain. Consult a tax professional for advice specific to your situation.

Why is Philadelphia’s transfer tax so much higher than the rest of the state?

Philadelphia has the authority to impose its own transfer tax under the city’s home rule charter. The city has set the rate at 3.278% (on top of the 1% state tax) to generate revenue for city services. Philadelphia’s transfer tax rate has increased over the years and is the highest in the state by a wide margin. This higher rate is a meaningful factor in the total cost of buying and selling property in the city and affects both pricing and market activity.

Do I pay transfer tax if I inherit a property?

No. Transfers by will or through intestate succession (inheritance without a will) are exempt from transfer tax. However, inherited property may be subject to Pennsylvania inheritance tax, which is a separate tax with its own rates and rules. If you later sell the inherited property, the sale to the new buyer will be subject to the standard transfer tax at that time.

How does the transfer tax apply to a short sale or foreclosure?

Transfer tax applies to foreclosure sales and short sales just as it does to any other real estate transaction. The tax is based on the sale price (even if it’s less than the mortgage balance). In sheriff’s sales and tax sales, the buyer is typically responsible for the full transfer tax. There is no exemption for distressed sales, though the lower sale price means a lower tax amount in dollar terms.

Planning to buy or sell in Pennsylvania? Use our mortgage calculator to estimate your monthly payment, our closing cost calculator to budget for settlement expenses including transfer tax, and our net proceeds calculator to see what you’ll keep after selling. For a full overview of the buying process, visit our homebuying guide, or explore the selling guide if you’re listing a property.