What is the Pennsylvania realty transfer tax?
It is a tax on the value of real estate transferred by deed, long-term lease or other writing, imposed by Article XI-C of the Tax Reform Code of 1971 (72 P.S. §8101-C and following). Section 1102-C sets the state rate at 1% of the value of the real estate in the Commonwealth.
Municipalities and school districts add their own realty transfer taxes, which county Recorders of Deeds usually collect at the same time. The state keeps the 1%, with 85% going to the General Fund and 15% to the Keystone Recreation, Park and Conservation Fund. The local share is divided between the municipality and the school district.
Pennsylvania is one of the more expensive states in the country to sell in. Where much of the South and West charges a few tenths of a percent or nothing, a typical Pennsylvania sale pays 2%, and a sale in Philadelphia or Pittsburgh pays more than twice that.
Local realty transfer tax rates
In most of the state, the municipality and school district together levy 1%, for 2% in total with the state tax. Some charge more. Allegheny County reports total rates from 2% to 5% across its municipalities, with Shaler Township at 2% and the City of Pittsburgh at the top.
Philadelphia raised its city rate from 3.278% to 3.578% on July 1, 2025, its first change since 2018, to fund the H.O.M.E. affordable housing plan. Add the state’s 1% and a Philadelphia sale pays 4.578%. In Pittsburgh, the total is 5%: 1% state, 3% city and 1% Pittsburgh School District, a rate that has applied to commercial deeds recorded since April 1, 2020.
| Location | State | Local | Total |
|---|---|---|---|
| Typical municipality and school district | 1% | 1% | 2% |
| Shaler Township (Allegheny County) | 1% | 1% | 2% |
| Philadelphia | 1% | 3.578% | 4.578% |
| City of Pittsburgh | 1% | 4% | 5% |
Who pays transfer tax in Pennsylvania?
By custom, buyer and seller split it evenly. The law doesn’t require that. The Pennsylvania Department of Revenue says the grantor and grantee are jointly and severally liable, and Philadelphia says it can collect 100% from either party. If one side fails to pay, the other is on the hook.
That makes the transfer tax a real negotiating point on large deals. A buyer who asks the seller to cover the whole 2%, or the whole 4.578% in Philadelphia, is asking for a price cut. On a $5,000,000 Philadelphia building, the difference between splitting and paying it all is $114,450.
When and how the tax is paid
The tax is paid when the deed is presented to the county Recorder of Deeds, and your title company collects both the state and local shares at closing. In Philadelphia, payment is due when the deed is recorded, and within 30 days after the Department of Records receives it.
The tax is measured on the value of the real estate, including improvements the buyer has contracted for. When a deed recites little or no money, the value is usually the computed value: the county’s assessed value multiplied by the common level ratio the Department of Revenue publishes for each county every July. Each year’s ratios take effect on July 1, so check the one in force on your recording date.
The 90% real estate company rule
Pennsylvania doesn’t let you sidestep the tax by selling the entity instead of the deed. Under Section 1102-C.5, a real estate company becomes an acquired company when a change in ownership, however it is made, transfers 90% or more of the total ownership interest in the company within three years, directly or indirectly, without affecting the continuity of the company.
A real estate company is one primarily engaged in holding, selling or leasing real estate, with 90% or more of its ownership held by 35 or fewer persons, and that either gets 60% or more of its gross receipts from real estate or holds Pennsylvania real estate worth 90% or more of its tangible assets. A single-property apartment LLC with a handful of members fits easily.
Within 30 days of becoming an acquired company, the company must file a declaration of acquisition in each county where it holds real estate, stating the value of those holdings, and pay the state and local tax on it. Exclusions can still apply to company interests. In 430 Stump Road, LLP v. Commonwealth (2025), the en banc Commonwealth Court threw out a tax on a 98% interest that passed from a living trust to a marital trust after the owner’s death, holding the statute’s living-trust exclusion covered it.
- Philadelphia sets a tighter trigger: a transfer of 75% or more of a real estate company, counted over six years.
- Philadelphia’s policy statement also looks through upper-tier entities and adds ownership changes across tiers together, so a sale higher up a structure can still count.
Exemptions apartment investors run into
Pennsylvania’s exclusions are narrower than most states’, and the one investors most often expect is missing. The Department’s regulation at 61 Pa. Code §91.193 has no general exclusion for deeding a building from yourself to an LLC you own, so that deed is usually taxed on the computed value. Plan any entity restructuring before you buy, not right before you sell.
- Entity to owner: a deed from a corporation or association to a shareholder or member is excluded if the owner’s share of the realty matches their share of the entity and they have held the interest for more than two years.
- Mergers and conversions: deeds confirming a statutory merger, consolidation, division or conversion are excluded, unless avoiding the tax is the primary purpose.
- Family: transfers among spouses, parents and children, siblings and certain in-laws are excluded, but a resale within one year is taxed as if the original owner sold.
- Trusts: transfers to or from the trustee of an ordinary trust or a living trust, and from a trust after the settlor’s death.
- Foreclosure: a deed to the holder of a bona fide defaulted mortgage, in lieu of foreclosure or at a judicial sale where the holder buys.
- Straw parties: no-consideration transfers between a principal and an agent or straw party.
Worked example: $2M and $5M Pennsylvania apartment sales
A 28-unit building in a suburban township with a 1% local rate sells for $2,000,000. The state tax is $20,000 and the local tax is $20,000, for $40,000. Split evenly, each side pays $20,000.
The same building in Philadelphia owes $20,000 to the state and $71,560 to the city, or $91,560 in total. At $5,000,000 the Philadelphia bill is $50,000 plus $178,900, or $228,900. A $5,000,000 sale in the City of Pittsburgh owes $50,000 state and $200,000 local, or $250,000.
| Sale | State 1% | Local tax | Total | Each side if split |
|---|---|---|---|---|
| $2M, 1% local | $20,000 | $20,000 | $40,000 | $20,000 |
| $2M, Philadelphia | $20,000 | $71,560 | $91,560 | $45,780 |
| $5M, 1% local | $50,000 | $50,000 | $100,000 | $50,000 |
| $5M, Philadelphia | $50,000 | $178,900 | $228,900 | $114,450 |
| $5M, City of Pittsburgh | $50,000 | $200,000 | $250,000 | $125,000 |
Pennsylvania compared with neighboring states
Only Delaware comes close. Delaware’s state realty transfer tax is 3%, or 2.5% where the county or town levies the full 1.5% local tax, which puts the total at 4% in those places, split equally between grantor and grantee by statute. New York’s state tax is $2 per $500, or 0.4%, before New York City’s own taxes. Maryland’s state transfer tax is 0.5%, and its counties add their own.
Ohio and West Virginia are far cheaper. Ohio counties charge a mandatory $1 per $1,000 fee and may add a tax of up to 30 cents per $100, so 0.1% to 0.4% in all. West Virginia’s base rates add up to $1.65 per $500.
| State | Typical transfer tax | On a $2,000,000 sale |
|---|---|---|
| Pennsylvania | 1% state + usually 1% local | $40,000 |
| Delaware | 3% state, or 2.5% + 1.5% local | $60,000 to $80,000 |
| Maryland | 0.5% state + county tax | $10,000 state |
| New York (outside NYC) | $2 per $500 (0.4%) | $8,000 |
| West Virginia | $1.65 per $500 at base rates | $6,600 |
| Ohio | 0.1% to 0.4% county | $2,000 to $8,000 |
How the transfer tax fits into your total cost of selling
In Pennsylvania the transfer tax is often the second-largest closing cost after the commission, and in Philadelphia it can be the largest. Your share counts as a selling expense, which lowers the amount realized for income tax purposes.
The income tax is still the bigger number for most long-time owners. Federal tax reaches depreciation recapture at up to 25% and long-term capital gain at up to 20%, with the 3.8% net investment income tax for many sellers, and Pennsylvania adds its flat personal income tax on the gain.
A 1031 exchange defers the income tax but not the transfer tax. The regulation’s exclusions don’t cover like-kind exchanges, so the relinquished sale pays realty transfer tax, and so does the purchase of a Pennsylvania replacement property, where the buyer’s customary half falls on you.
Selling your Pennsylvania apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units across Pennsylvania, including Philadelphia, Pittsburgh, the Lehigh Valley, Harrisburg, Lancaster, Reading and Erie. We buy directly, can offer seller-carry terms, and work within 1031 exchange deadlines.
Send the property address and unit count through the form on this page or call (469) 660-2977. We typically respond within 48 hours. How the state and local transfer tax is split is set in the purchase agreement, and we’ll show it line by line in your net sheet before you sign.
