Philadelphia Transfer Tax Explained for Buyers

Buying in Philadelphia and trying to predict your closing costs? The real estate transfer tax is one line item that can swing your cash-to-close by thousands. You want a clear, simple explanation you can trust, especially if you’re comparing a Center City condo with a home just over the city line in Montgomery County. In this guide, you’ll learn what the transfer tax is, how it’s calculated in Philadelphia, how payment is typically split, and how it compares to nearby suburbs so you can plan with confidence. Let’s dive in.

What the transfer tax is

A real estate transfer tax is a fee charged when property changes hands. It is usually a percentage of the sale price and is collected at or before closing. In Pennsylvania, multiple layers can apply, including state, county, and municipal charges.

Inside the City of Philadelphia, the city administers its own transfer tax. Adjacent counties like Montgomery County have county-level charges. You will see the transfer tax listed as a separate line on your Closing Disclosure or settlement statement, and your title or settlement company will calculate and remit it.

Payment responsibility is negotiable. Local custom or contract language determines who pays. In many Philadelphia condo and rowhome transactions, buyers and sellers commonly split the tax 50-50. That is not a rule, and the contract should spell out the split.

How Philadelphia transfer tax works

The calculation is straightforward: Transfer tax equals the sale price multiplied by the transfer tax rate. Your title or settlement company will compute the exact number for your deal and include it on the Closing Disclosure.

Who typically pays in Philadelphia. Many listings reflect a 50-50 split between buyer and seller. Some situations differ. New construction, institutional sellers, or investor sales may ask a buyer to pay the full tax, or the seller may cover it. The contract controls.

When the tax is paid. Transfer tax is due at closing. The settlement agent collects it and files the required transfer paperwork with the city or county.

Exemptions and special cases. Certain transfers can be exempt, such as between spouses, incident to divorce, some transfers to government or qualifying nonprofit entities, and certain foreclosure or sheriff’s sales. These are narrowly defined. Confirm any exemption with your title company and the municipal revenue office.

Role of the contract. To avoid confusion, make the transfer-tax split explicit in your purchase agreement. If the contract is silent, people often look to local custom, but it is better to state it clearly.

Important note: Transfer tax rates and payment customs can change. Always confirm the current rate and your share with your title company, the City of Philadelphia Department of Revenue, or the county recorder before you finalize numbers.

Philadelphia vs. Montgomery County costs

If you are deciding between a home in the city and one in Montgomery County, the transfer tax can affect your cash-to-close in a meaningful way. City rates are often higher than many surrounding counties, so it pays to compare.

Illustrative example only

The figures below are for illustration. Your title company will confirm the current rates and exact amounts for your purchase.

• Example sale price: $400,000
• Example combined Philadelphia rate: 3.278 percent (illustrative)
• Example combined Montgomery County rate: 1.00 percent (illustrative)

How the math looks in this example:

• Philadelphia total tax: $400,000 × 0.03278 = $13,112
  • If split 50-50, buyer pays $6,556
• Montgomery County total tax: $400,000 × 0.01 = $4,000
  • If seller pays per common local custom, buyer pays $0
  • If split 50-50, buyer pays $2,000

What this means for you. In this example, a Philadelphia purchase with a 50-50 split adds $6,556 to your cash-to-close just for transfer tax, compared with a possible $0 in Montgomery County if the seller pays the whole county tax, or $2,000 if split. This is one reason buyers comparing a Center City condo with a home in Elkins Park, Jenkintown, or Cheltenham should ask for side-by-side closing estimates before they write an offer.

Where transfer tax fits in closing costs

The transfer tax is one of several items that make up your total closing costs. It is usually among the larger line items in Philadelphia transactions, especially on condos and rowhomes at common price points.

Buyer closing-cost checklist

Use this list to budget. Ranges are typical and vary by loan type, property, and location.

• Transfer tax (your negotiated share) - computed as sale price × applicable rate.
• Mortgage-related fees:
  • Loan origination or processing fees - often 0.25 percent to 1 percent of the loan amount.
  • Appraisal fee - typically $300 to $700.
  • Credit report fee - about $20 to $50.
• Title and settlement fees:
  • Title search and exam - several hundred dollars.
  • Title insurance (owner’s and lender’s policies) - depends on price. In Pennsylvania, an owner’s policy is often about 0.4 percent to 0.8 percent of the purchase price, but it varies.
  • Settlement or closing fee - about $200 to $800, varies by company.
• Government and recording fees:
  • Deed recording fee - generally a small flat fee.
  • Mortgage recording fee - small flat fee if you finance.
• Escrows and prorations:
  • Property-tax proration - you may reimburse the seller for prepaid taxes covering the period after closing.
  • HOA or condo dues proration if applicable.
• Prepaid items required by your lender:
  • Prepaid interest, homeowner’s insurance premium, and your initial escrow deposit for taxes and insurance.

Example cash-to-close snapshot

Illustrative only, using the example Philadelphia numbers above.

• Purchase price: $400,000
• Buyer’s transfer-tax share (example Philly 50-50): $6,556
• Estimated title insurance and settlement fees: $2,500
• Appraisal and inspection: $800
• Lender fees and prepaids: $3,000
• Estimated cash to close before down payment: $12,856

This shows how the transfer tax can be a large line item inside the city.

Steps to get exact numbers

Follow these steps as you prepare your offer and loan.

1. Check the contract. Confirm who pays the transfer tax and whether there is a specified split.
2. Ask your title or settlement company for a Buyer’s Closing Cost Estimate that includes the exact transfer-tax line.
3. Request a preliminary cost-to-close estimate from your lender as well. Make sure it matches the title estimate.
4. If you might qualify for an exemption, have your title company verify eligibility with the municipal revenue office.
5. Comparing city vs. suburbs? Ask your title company to prepare side-by-side estimates for Philadelphia and Montgomery County properties.

Tips to reduce surprises

A little planning goes a long way. Use these best practices early in your search.

• Ask about the split before you write. Request clarity on transfer-tax responsibility in the offer. In some cases you can negotiate a seller contribution.
• Budget with a buffer. If you are unsure of the exact rate or split, budget conservatively so you have room for changes.
• Verify before you sign. Confirm the current rate and your share with your title company and the City of Philadelphia Department of Revenue.
• Review the Closing Disclosure early. Work with your lender and settlement agent to review the draft Closing Disclosure as soon as it is available.
• Coordinate with assistance programs. If you are using down payment assistance or a grant, ask whether transfer tax affects eligibility or allowable funds.

Quick calculation templates

Use these prompts to map out your costs. Replace the blanks with your numbers.

• Sale price: $________
• Transfer tax rate: ________% (decimal ________)
• Total transfer tax: Sale price × rate = $________
• Buyer’s share: Total × buyer fraction = $________

If you are comparing areas, ask your title company to produce two quick estimates for the same purchase price:

• Philadelphia estimate: include the current combined city rate and your negotiated share.
• Montgomery County estimate: include the current county rate, and note whether the seller will pay per local custom or if you are splitting.

Final thoughts

The Philadelphia transfer tax is simple to calculate, but it can have a big impact on your cash-to-close. The cleanest path is to decide your target neighborhoods, agree on the transfer-tax split in the contract, and get a written estimate from your title company before you submit your offer. If you are weighing Center City against close-in Montgomery County, ask for side-by-side estimates so you can compare apples to apples.

If you want help building a realistic closing budget for any home on your list, reach out. As a locally rooted team that works across Philadelphia and eastern Montgomery County, we can coordinate with your lender and title company so you have exact numbers before you make your move. Connect with Melissa Avivi & Barri Beckman for a custom closing-cost estimate and guidance tailored to your search.

FAQs

How is Philadelphia’s transfer tax calculated for home purchases?

• It is the sale price multiplied by the applicable transfer tax rate. Your title company computes the exact amount and lists it on your Closing Disclosure.

Who typically pays the transfer tax in Philadelphia sales?

• Payment is negotiable and set by the contract. A 50-50 split between buyer and seller is common in many condo and rowhome deals, but it can vary by situation.

When is the transfer tax due in a Philadelphia closing?

• It is due at settlement. The title or settlement company collects and remits it to the city or county and files the required paperwork.

Are there exemptions from transfer tax for certain Philadelphia transfers?

• Some transfers can be exempt, such as between spouses, incident to divorce, certain transfers to government or qualifying nonprofits, and some foreclosure or sheriff’s sales. Confirm eligibility with your title company.

How does Philadelphia’s transfer tax compare with Montgomery County for buyers?

• City rates are often higher than many nearby counties. In the example shown, a $400,000 Philadelphia purchase could add thousands more to a buyer’s cash-to-close than a similar purchase in Montgomery County, depending on the split and local custom.

Can a buyer negotiate for the seller to pay all of the transfer tax in Philadelphia?

• Yes. It is negotiable. Whether a seller agrees depends on market conditions and the terms of your offer. Put the agreed split in the contract.

Is transfer tax part of my mortgage loan amount in Pennsylvania?

• It is usually a cash item paid at closing and not rolled into the mortgage principal. Ask your lender if your program has any exceptions.