How much is Pennsylvania realty transfer tax and who pays it?

The Pennsylvania Department of Revenue says the realty transfer tax is 1 percent on the value of real estate, including contracted-for improvements, transferred by deed, instrument, long-term lease or other writing. County Recorders of Deeds collect it when a deed is recorded and send the state's 1 percent to the Department of Revenue.

Local governments have the option to share their own realty transfer tax among school districts and municipalities. The Department of Revenue page does not list local rates, so the total in your town depends on where the property sits. Your county Recorder of Deeds, your agent or the title company can tell you the combined rate before you sign a contract. In Philadelphia, the City lists 3.578 percent plus the 1 percent Commonwealth tax, for a total of 4.578 percent.

The Department of Revenue says the grantor and grantee are held jointly and severally liable. That means the state can collect from either one. In practice the sales contract decides the split, and many contracts divide it between buyer and seller. If you are the seller, read that clause before you sign. A real estate attorney can explain it. Here is a simple illustration. On a $200,000 sale, the 1 percent state tax is $2,000. Local tax is added on top where it applies, and the amount depends on the school district and municipality. In Philadelphia, the City lists a total of 4.578 percent, which on $200,000 is $9,156. If the contract splits the tax evenly, each side pays half. Always ask your closing agent for a written estimate before you accept an offer, and make sure the offer says who pays. A low price with the seller paying everything can net less than a slightly lower price with a shared split.

The state lists several exempt transfers, including certain transfers among family members, transfers to governmental units and property passed by testate or intestate succession. Do not assume you qualify. Exemptions have conditions. Ask a real estate attorney before you claim one. Because the grantor and grantee are both liable under the state's rules, a recorder can look to either one. That is why title companies collect the tax at closing and send it with the deed. If a deed is recorded without the tax, the debt does not disappear. It can come back to both sides. If you ever receive a bill about an old sale, do not ignore it. Ask the title company that handled the closing for their records, and ask a real estate attorney how to respond.

The tax comes out of what you net unless the contract shifts it. When comparing a listing to a cash offer, ask each buyer who pays what. Kaizen Home Buyers buys as-is for cash, with no repairs and no agent commission. We make offers within 24 hours and can close in 14 to 30 days or on your date. Call 267-329-0084.