Pennsylvania Transfer Tax Explained: What Buyers and Sellers Pay

Pennsylvania’s real estate transfer tax is one of the more significant closing costs buyers and sellers face in the state. The tax applies every time real property changes hands, and the total rate depends on where the property is located. The state charges a flat 1% transfer tax on every transaction statewide. On top of that, most municipalities and school districts levy their own transfer taxes, pushing the combined rate from 2% in many suburban areas to a whopping 3.278% in Philadelphia. On a $300,000 home, that means $6,000–$9,834 in transfer taxes alone.

This guide explains how the transfer tax works, who pays what, available exemptions, and how the rates vary across the state.

How Pennsylvania Transfer Tax Works

The Pennsylvania real estate transfer tax is a percentage of the sale price (or the property’s fair market value, whichever is higher). It’s collected at closing and paid to three separate entities:

The total combined rate is typically 2.0% in most areas (1% state + 1% local split between municipality and school district). However, rates vary significantly by location.

Transfer Tax Rates by Location

Philadelphia’s 3.278% combined rate is the highest in Pennsylvania and among the highest in the country. On a $400,000 Philadelphia home, transfer taxes total $13,112 — a significant addition to closing costs. This is one reason why Philadelphia’s overall closing costs run 5–7% of the purchase price compared to 3–5% in most of the state. Budget for this with our closing cost calculator.

Who Pays the Transfer Tax?

By established custom in most of Pennsylvania, the transfer tax is split equally between buyer and seller — each pays 50% of the total. However, this is a custom, not a legal requirement. The split is negotiable as part of the purchase agreement.

In hot markets, buyers may offer to pay the full transfer tax to make their offer more attractive. In buyer-friendly markets, sellers may agree to cover the entire amount as a concession. Your real estate agent should advise on what’s customary in your specific market.

Transfer Tax Exemptions

Several types of transfers are exempt from some or all of the transfer tax:

Full Exemptions

• Transfers between spouses: Transfers between husband and wife are exempt from all transfer taxes
• Transfers to a child, grandchild, or parent: Transfers between direct lineal family members (parent to child, grandparent to grandchild) are exempt from the state 1% tax but may still owe local transfer taxes depending on the municipality
• Transfers between divorced spouses: Property transfers pursuant to a divorce decree are exempt
• Transfers to government entities: Sales to federal, state, or local government are exempt

Partial Exemptions

• First-time homebuyers (Philadelphia only): The City of Philadelphia offers a transfer tax reduction for qualifying first-time homebuyers. The city’s share of the transfer tax is reduced, saving buyers approximately $3,000–$6,000 on a typical purchase. Eligibility requirements include income limits and first-time buyer status.
• Agricultural preservation: Transfers of agricultural land under conservation easements may qualify for reduced rates
• Judicial sales: Sheriff’s sales and tax sales may have different transfer tax obligations depending on the circumstances

How Transfer Tax Affects Your Purchase Budget

Transfer tax is a one-time cost at closing, but it significantly impacts your upfront cash requirements. On a $350,000 home with a standard 50/50 split at a 2% combined rate:

• Your share: $3,500 (1% of purchase price)
• Added to other closing costs: Title insurance ($1,500–$3,000), lender fees ($1,500–$3,000), recording fees ($200–$500), inspections ($500–$1,200)
• Total buyer closing costs: $10,000–$15,000 (3–4.5% of purchase price)

In Philadelphia, your share of a $350,000 purchase would be roughly $5,737 (1.639% of purchase price) instead of $3,500 — a $2,237 increase just from the higher local transfer tax rate. This is one of many reasons why buying in Philadelphia has higher upfront costs than buying in the suburbs, despite the lower home prices.

Plan your cash needs with our closing cost calculator and budget your down payment with the down payment savings calculator.

How the Transfer Tax Stacks Up Nationally

Pennsylvania’s transfer tax is higher than most states. The national average for state-level transfer taxes is around 0.5%, making PA’s 1% state rate roughly double. When you add local taxes, the total 2% rate in most of the state puts Pennsylvania in the top 10 nationally for transfer tax burden. Philadelphia’s 3.278% combined rate ranks among the five highest local transfer tax rates in the country, alongside cities like Chicago (3.0% on properties over $500,000) and San Francisco (varies by price tier up to 6.0%).

Several neighboring states charge less. New Jersey’s transfer tax is approximately 0.4–1.0% depending on price (with a mansion tax surcharge above $1 million). Delaware charges 4% but splits it 50/50, meaning each party pays 2% — actually higher than most PA transactions. Maryland charges 0.5% state plus local rates. For buyers relocating from out of state, the transfer tax is often an unexpected line item at closing that can significantly affect cash requirements.

Transfer Tax for Sellers

Sellers need to factor transfer tax into their net proceeds calculation. On a $400,000 sale with a 50/50 split at 2% combined rate:

• Seller’s transfer tax share: $4,000
• Agent commission (5–6%): $20,000–$24,000
• Title insurance (owner’s policy, customary for seller to pay): $1,500–$2,500
• Outstanding mortgage payoff: varies
• Total seller closing costs: $25,500–$30,500 (6.4–7.6% of sale price)

In Philadelphia, the seller’s share jumps to roughly $6,556 on a $400,000 sale (1.639% of the sale price), pushing total seller closing costs above 8% of the sale price. This is one reason Philadelphia sellers sometimes negotiate for the buyer to assume a larger portion of the transfer tax — particularly in a seller’s market where buyers compete for limited inventory.

Use our seller net proceeds calculator to estimate what you’ll actually pocket from a sale. Read the full PA buying guide for a complete overview of the transaction process.

Compare With Other States

Considering other markets? Here’s how other states compare:

• Connecticut Conveyance Tax Explained: What Buyers and Sellers Pay
• Michigan Transfer Tax Explained: State and County Rates
• California Transfer Tax Explained: What Buyers and Sellers Pay

Frequently Asked Questions

Can I deduct or reduce the transfer tax through negotiations?

You cannot deduct the transfer tax from your income taxes, but you can negotiate who pays it. In a buyer’s market with 30+ days on market, asking the seller to cover 60–75% of the total transfer tax is a reasonable negotiating tactic. Some sellers in slower markets (parts of northeast PA, the Poconos, and rural counties) agree to pay the full transfer tax to attract offers. Your agent should run a net sheet comparing different split scenarios so both sides understand the dollar impact.

How much is the transfer tax in Pennsylvania?

The state charges 1% on all real estate transfers. Most municipalities add another 1% in combined local and school district transfer taxes, making the total 2% in most of the state. Philadelphia is the exception at 3.278% combined. On a $300,000 home, transfer taxes total $6,000 in most locations and $9,834 in Philadelphia.

Do buyers or sellers pay the transfer tax in PA?

By custom, the transfer tax is split 50/50 between buyer and seller. This is not a legal requirement — it’s a negotiable term of the purchase agreement. In competitive markets, buyers may offer to pay a larger share. In buyer-friendly markets, sellers may agree to cover more. Your agent will advise on what’s typical in your area.

Are there any transfer tax exemptions in Pennsylvania?

Yes. Transfers between spouses are fully exempt. Transfers to children, grandchildren, or parents are exempt from the state 1% tax (local taxes may still apply). Use our rent affordability calculator for detailed numbers. Divorce-related transfers are exempt. Philadelphia offers a reduced rate for qualifying first-time homebuyers. Agricultural and conservation transfers may also qualify for reduced rates.

When is the transfer tax paid?

The transfer tax is collected at closing (also called settlement in Pennsylvania). The settlement agent — typically a title company or attorney — calculates the tax, collects the funds from the buyer and seller according to the agreed split, and remits payment to the state and local taxing authorities. The tax must be paid before the deed can be recorded with the county Recorder of Deeds. If you’re using a mortgage, your lender’s closing disclosure will itemize the transfer tax under “Government Recording and Transfer Charges. Use our amortization schedule calculator for detailed numbers.” Cash buyers should confirm the amount with their title company before the settlement date.

Why is Philadelphia’s transfer tax so high?

Philadelphia’s combined 3.278% rate includes the state’s 1% plus the city’s own transfer tax of 2.278% (shared between the city and the school district). Philadelphia is one of the few municipalities in PA that levies a transfer tax this high. The revenue funds city services and the school district. It’s one of several Philadelphia-specific costs (along with the 3.75% wage tax) that make the city more expensive on a transactional basis than its suburbs, despite lower home prices.

Is the transfer tax deductible on my taxes?

Transfer tax paid by the buyer is not deductible as a real estate tax on your federal income tax return. However, it is added to your cost basis in the property, which can reduce capital gains tax when you eventually sell. Transfer tax paid by the seller reduces net proceeds but is treated as a selling expense, not a deductible tax. Consult a tax professional for your specific situation. Estimate your monthly costs with our mortgage calculator.