Philly vs Montco Transfer Tax: What Buyers Should Expect

Eyeing a Philly rowhome and a Montgomery County house at the same price point? Your closing costs can look very different because of transfer taxes. It is a one-time line item that can add thousands to your cash to close, and the rules shift once you cross City Avenue.

You want clarity before you write an offer. In this guide, you will learn what a transfer tax is, how Philadelphia and Montgomery County apply it, a Cheltenham example, and how to estimate, negotiate, and verify your numbers. You will also get a simple checklist to keep your purchase on track. Let’s dive in.

Transfer tax basics

What it is

A real estate transfer tax is a one-time tax collected at closing when title to a property changes hands. It is usually calculated as a percentage of the sale price, sometimes called the consideration. You will see it itemized on your Closing Disclosure.

The typical components

On a Pennsylvania closing, transfer-related charges can include:

• State realty transfer tax.
• County transfer tax, if charged.
• Municipal or city transfer tax, where applicable.
• Recording and clerk fees to record the deed, which are separate from the transfer tax and are usually flat or tiered amounts.

Who pays

Payment is negotiable and set by the contract. Local custom can influence expectations, but there is no single rule. Always confirm who is paying which portion on your signed agreement and in your preliminary closing statement.

Common exemptions

Some transfers may qualify for exemptions, like certain transfers between spouses or transactions involving government entities or qualifying nonprofits. Eligibility and documentation requirements vary. Confirm with your title company or the relevant revenue office early so you can gather the right paperwork.

Philly vs Montco at a glance

Philadelphia purchase

If you buy inside Philadelphia city limits, you will generally see two taxes on the transfer-tax line: the Pennsylvania state transfer tax and a Philadelphia city transfer tax. The city component is a major reason Philadelphia purchases typically carry higher transfer-tax costs than many suburban areas.

For current rules and the city tax rate, use the Philadelphia Department of Revenue’s official website. You can start at the Philadelphia Department of Revenue and search for real estate transfer tax guidance.

Montgomery County purchase

If you buy in Montgomery County, including townships like Cheltenham, you will generally see the Pennsylvania state transfer tax plus a county transfer tax. Most Montgomery County boroughs and townships do not add an extra municipal transfer tax on top of the county’s rate.

To verify county procedures and recording fees, visit the Montgomery County Recorder of Deeds. For state-level rules and exemptions that also apply in Montco, refer to the Pennsylvania Department of Revenue.

Practical takeaway

Because Philadelphia adds a city tax and Montgomery County typically does not add a separate municipal tax, a buyer paying the same price usually owes more transfer tax in Philadelphia than in Montgomery County, all else equal. This difference directly affects your cash to close.

How to estimate your transfer tax

The simple formula

Transfer tax due = Sale price × Applicable transfer-tax rate(s)

To estimate, list each element that applies to your property:

1. State transfer tax rate.
2. County transfer tax rate.
3. City transfer tax rate, if the home is in Philadelphia.
4. Any local municipal surcharge, if applicable.
5. Recording fees, which are separate flat or tiered amounts.

Ask your title company for a written estimate or preliminary Closing Disclosure to see how these line items add up.

Illustrative comparison

Illustrative example: on a $400,000 sale, a Philadelphia transfer tax bill can be several thousands of dollars higher than a Montgomery County bill because of Philadelphia’s city tax component. Always confirm current rates for your specific address and closing date with your title company or the relevant revenue office.

For verified, current rules and rates, check:

• Philadelphia Department of Revenue
• Pennsylvania Department of Revenue
• Montgomery County Recorder of Deeds

Cheltenham case study

What changes outside the city

Cheltenham is in Montgomery County, not Philadelphia. A Cheltenham purchase will not be subject to the Philadelphia city transfer tax. You would expect to see the Pennsylvania state transfer tax and the Montgomery County transfer tax, plus standard recording fees.

The result is simple. For the same sale price, a Cheltenham closing typically shows a lower transfer-tax line item than an identical-price home in Philadelphia. This difference reduces your cash to close, or it can give you more flexibility for repairs, rate buydowns, or reserves.

You can confirm local procedures and any township-level notices by visiting the Cheltenham Township website and the Montgomery County Recorder of Deeds.

Other closing costs still apply

Transfer-tax savings are only one part of your closing budget. You should still plan for title insurance premiums, lender fees if you finance, prorated taxes, prepaid interest, homeowner’s insurance, inspection costs, potential condo or HOA move-in fees, and standard recording charges. New construction and resale condos both generally incur transfer tax. Builders may choose to pay the tax or pass it on to the buyer, so confirm the arrangement in your contract.

Negotiation and budgeting tips

Make the tax work for your offer

• Clarify who pays which portion. Transfer-tax responsibility is negotiable. Spell it out in your offer so there are no assumptions.
• Compare apples to apples. If you are weighing a Philadelphia home and a Montgomery County home at the same price, include the transfer-tax difference in your cash-to-close worksheet before you decide where to bid.
• Leverage closing costs. If you expect a higher transfer tax in Philadelphia and the seller is flexible, you can request a seller credit or a split of the tax in your offer. Put the terms in writing.

Build a precise budget

• Ask for a written estimate. Request a preliminary closing statement from your title company that breaks out state, county, and city taxes, plus recording fees.
• Verify exemptions early. If you believe an exemption could apply, collect the required documents ahead of time to avoid delays at closing.
• Recheck near settlement. Rates and fees can change. Confirm your numbers again once your closing date is set.

Where to verify current rules and rates

Use these official resources to confirm what applies to your property and closing date:

• Philadelphia purchases: start with the Philadelphia Department of Revenue for real estate transfer tax guidance and forms.
• Statewide rules and exemptions: the Pennsylvania Department of Revenue publishes transfer-tax guidance and exemptions.
• Montgomery County procedures and recording fees: the Montgomery County Recorder of Deeds provides deed recording instructions, fee schedules, and local procedures.
• Local notices: check the Cheltenham Township site for township-level updates or links to county resources.

Final thoughts

Transfer taxes are predictable when you know which jurisdictions apply. Inside Philadelphia, you will see both the state and city transfer taxes. In Montgomery County, including Cheltenham, you will see the state and county taxes, and most towns do not add a separate municipal tax. That is why Philadelphia closings often show a higher transfer-tax line than Montgomery County for the same sale price.

If you want a clear number before you write an offer, ask your title company for a written estimate and confirm the current rates with the official sources listed above. If you are deciding between a city home and a Montco home, we will help you compare total cash to close so you can move forward with confidence. If you are ready to run the numbers on a specific address, reach out to Melissa Avivi & Barri Beckman for local guidance and a tailored closing estimate.

FAQs

Who pays the transfer tax in Pennsylvania home purchases?

• It is negotiable and set by the contract. Local custom can influence expectations, so request a written closing estimate and confirm who is paying which portions before you sign.

Are Philadelphia transfer taxes ever exempt or refundable?

• Some transfers may be exempt by statute, such as certain transfers involving government entities or qualifying nonprofits. Eligibility and documentation must be verified with the revenue office or your title company.

Does transfer tax apply to new construction and condos?

• Yes in most cases. Builders sometimes agree to pay the tax or split it, so confirm the arrangement in your purchase contract. Condo rules do not change the tax but may add move-in fees or assessments.

How much can Philly’s city tax change my budget?

• On a typical city purchase, the added Philadelphia city tax can increase your closing costs by several thousand dollars compared with an equal-price home in Montgomery County. Run exact calculations using current rates for your address and date.

How do I estimate cash to close including transfer tax?

• Use the formula sale price × applicable tax rates, add recording fees, and then add your other closing items like title premiums, lender fees, and prepaids. Ask your title company for a preliminary Closing Disclosure that itemizes each cost.