Pennsylvania's realty transfer tax is 1% at the state level plus a local share, usually 1% from the county. Philadelphia's combined rate is much higher, roughly 4.5% effective mid-2025, and the tax is calculated on the full sale price.
The State Rate and the Local Add-Ons
The Pennsylvania realty transfer tax starts with a state rate of 1% of the sale price. On top of that, most counties add their own local transfer tax, commonly another 1%, and some municipalities add their own share as well. The total is the sum of the state and local rates.
For most of the six counties I serve, that means a total transfer tax around 2% of the sale price, split between the state and local levels. The rate is applied to the full sale price of the property, which is why the tax bill on a higher-priced home can feel very large at closing.
Philadelphia's Higher Combined Rate
Philadelphia is the exception, because the city adds its own transfer tax on top of the state rate. Effective mid-2025, Philadelphia's combined realty transfer tax is roughly 4.6% of the sale price: the city's portion around 3.6% plus the state's 1%. That makes Philadelphia's transfer tax among the highest in the region, and it is a significant closing cost for both sides of a city sale.
If you are buying or selling in the city, ask your agent for the exact current combined rate at the time of your closing, because the city rate has changed over the years and the precise number matters when you estimate your costs.
What the Tax Is Calculated On
The transfer tax is calculated on the full value of the real estate being transferred, which for a normal sale is the sale price. In a typical home purchase with a mortgage, the tax applies to the entire price, including any part financed by a new loan.
If a buyer assumes an existing mortgage or the seller takes back financing, the details can change how the value is calculated. The tax rules also distinguish between the real estate itself and personal property that may be sold along with it, such as appliances or furniture. Allocating part of the price to personal property can reduce the taxable amount, but the allocation must be defensible and stated correctly.
A Quick Example
Let me show the math. For a $400,000 home in a county with a 1% state rate and 1% county rate, the transfer tax is $8,000. The seller's share and buyer's share depend on the contract, but the total never changes: 2% of $400,000 is $8,000.
In Philadelphia at a combined rate near 4.6%, the same $400,000 home generates roughly $18,400 in transfer tax. That is a difference of more than ten thousand dollars, which is why the transfer tax is a first-order budgeting question for city deals. When you estimate your closing costs, get the exact rate for the county or city where the property sits, not the rate from a neighboring county.
Who Collects It and How
The transfer tax is collected at settlement through the title company or settlement agent. The buyer and seller sign a declaration, the tax is paid from closing funds, and the deed is recorded only after the tax is satisfied. Recording the deed is the moment the transfer becomes official, so the tax cannot be skipped or deferred.
If a property transfers without a sale, such as through an inheritance or a gift, the tax may still apply based on the property's value, unless an exemption applies. Your settlement attorney can confirm the exact treatment for your situation and file the required documentation.
Smarty's Advice
The transfer tax is one of the easiest closing numbers to get wrong, because the rate depends on the specific county or city. I always quote the applicable rate for the exact location of the property, and I recommend my clients ask their settlement attorney to confirm the number before they sign.
If the tax feels unexpectedly large, check the rate first, Philadelphia is simply a different world from the suburbs. And if you are transferring property within a family, ask about exemptions before you pay, because eligible transfers can save you a very real amount.
Call 215-598-6848 or schedule a free consultation, and I will help you estimate the transfer tax for any home you are buying or selling.
Smarty's Advice Expert Insight
John Smart (Smarty) · Smarty Home Solutions / eXp Realty Agent, AI Certified Agent
The transfer tax has a list of exemptions that can save families real money, but they all require documentation. Transfers between spouses, including those made as part of a divorce settlement, are generally exempt, and so are certain transfers between parents and children and between other close family members. Each exemption has specific requirements, and the settlement agent must file the right paperwork to claim it.
Inherited property follows its own path. When a home passes through an estate to heirs, the transfer may be exempt under certain conditions, but the rules differ depending on whether the property is sold by the estate or transferred directly to a beneficiary. A sale by an executor to an outside buyer is a taxable transfer, while a direct transfer to an heir may qualify for an exemption.
Because the stakes are high, a real estate attorney is the right person to confirm whether your transfer qualifies. Claiming an exemption you do not qualify for can create problems at recording, and paying a tax you did not owe is money you will not get back easily.