The Pennsylvania real estate transfer tax is 1% at the state level, and in most of the Commonwealth the municipality and school district add another 1% on top of that, so a typical closing runs about 2% of the sale price. Philadelphia is the exception: the city’s local rate is 3.578%, which combined with the state’s 1% brings the total to 4.578%.1City of Philadelphia. Realty Transfer Tax The tax is due when the deed is recorded, and both buyer and seller are legally on the hook for it regardless of what the contract says.
What the Tax Is Calculated On
For a normal arm’s-length sale, the taxable value is the total consideration: cash paid, mortgages assumed, and the value of anything else exchanged as part of the deal.
When the deed shows little or no cash, or when the stated price looks suspiciously low, Pennsylvania falls back on a computed value using the Common Level Ratio. You multiply the county’s assessed value by the published CLR factor for that county, and if that number is higher than what the deed says was paid, the higher number becomes the tax base.2Pennsylvania Department of Revenue. Common Level Ratio Real Estate Valuation Factors The current factors apply to documents accepted from July 1, 2025, through June 30, 2026. CLR factors differ substantially from one county to the next, so an assessed value tells you nothing about tax exposure until you pair it with the local factor.
Who Actually Pays
Pennsylvania law makes the buyer and seller jointly and severally liable for the full tax.3Pennsylvania Department of Revenue. Realty Transfer Tax The state can pursue either party for the whole bill, and any private agreement between the parties is invisible to the Department of Revenue.
Custom in most Pennsylvania counties is a 50/50 split between buyer and seller. That’s a negotiation, not a rule. Either side can push for a different allocation during contract talks, and either side can end up paying the full amount if the other refuses to. If the purchase agreement is silent on transfer tax, both parties remain liable for everything. Put the split in writing before settlement day.
Exemptions That Matter
A meaningful list of transfers escapes the tax entirely, and claiming an exemption you’re entitled to is essentially free money if you know it applies.
Transfers Within the Family
Transfers between close family members are generally exempt. The statute covers spouses, former spouses (for property acquired before the divorce), parents and children, stepparents and stepchildren, siblings, and grandparents and grandchildren, and it extends to the in-law relationships in each category.4Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 8102-C.3 – Excluded Transactions
There is a clawback. If the recipient turns around and sells the property to someone outside the family within one year, the tax becomes due as though the original family transfer had never been exempt.4Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 8102-C.3 – Excluded Transactions If you’re receiving property from a relative and planning to sell soon, hold it for a full year or plan to pay the tax on the resale.
Government, Nonprofit, and Farmer Exemptions
Transfers to the Commonwealth, its political subdivisions, or its agencies are exempt, including deeds given in lieu of condemnation. Conveyances to municipalities, townships, school districts, or counties through sheriff sales or tax claim bureau sales qualify, as do certain nonprofit industrial development agencies and authorities.4Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 8102-C.3 – Excluded Transactions
Under Act 13 of 2019, farmland under an agricultural conservation easement can be transferred to a qualifying beginning farmer with no state or local transfer tax.5Commonwealth of Pennsylvania. Beginning Farmer Realty Transfer Tax Exemption The buyer needs written “qualified beginner farmer” certification from the Department of Agriculture before settlement. The Department recommends applying at least 30 days before closing, because without the certification in hand at recording, the exemption cannot be claimed.
Corrective and Other Exemptions
Corrective deeds that fix errors in previously recorded documents, deeds tied to certain financing arrangements, and transfers where beneficial ownership doesn’t actually change can also qualify. Whichever exemption you’re claiming, you have to give the Recorder of Deeds evidence, usually a notation on the deed or an accompanying affidavit citing the specific statutory basis. Incomplete documentation gives the Recorder grounds to reject the deed or assess the full tax.
Two Situations That Catch People Off Guard
Long-Term Leases
A lease with a term of 30 years or more is treated as a taxable transfer.6Pennsylvania Department of Revenue. PA Code Chapter 91 – Realty Transfer Tax When you’re counting to 30, any renewal option the lessee can exercise without renegotiating the rent counts toward the total. A 20-year lease with a fixed-rate 15-year renewal option is a 35-year lease for tax purposes. Renewals at fair market value set at the time of renewal do not count. Sale-and-leaseback deals draw scrutiny too, because both legs are potentially taxable unless the arrangement qualifies as an excluded financing transaction.
The Acquired Company Rule
Pennsylvania can impose transfer tax even when no deed is recorded. If a company qualifies as a “real estate company” and 90% or more of its total ownership interest changes hands within any three-year window, the entity becomes an “acquired company” and owes transfer tax on the underlying real estate.7Pennsylvania General Assembly. Pennsylvania Code 72 P.S. 8102-C.5 – Acquired Company The tax is 1% of the computed value (assessed value times the CLR factor), plus the applicable local rate.
A Realty Transfer Tax Declaration of Acquisition (Form REV-1728) must be filed in duplicate with the Recorder of Deeds in every county where the company owns property, within 30 days of crossing the 90% threshold.8Pennsylvania Department of Revenue. Realty Transfer Tax Declaration of Acquisition Missing that deadline triggers a penalty of 5% of the tax due per month or partial month, capped at 50% of the total. This rule catches M&A deals where the parties focused on corporate paperwork and forgot the real estate sitting underneath.
Paperwork and Payment at the Recorder of Deeds
Most transfers need a Realty Transfer Tax Statement of Value (Form REV-183), filed in duplicate with the Recorder of Deeds.9Pennsylvania Department of Revenue. Instructions for REV-183 Realty Transfer Tax Statement of Value You need one when the full consideration isn’t stated in the deed, when the transfer is a gift or involves no cash, or when you’re claiming an exemption.
The form asks for:
- Full legal names and mailing addresses of all grantors and grantees
- Street address, municipality, county, school district, and tax parcel number for the property
- A consideration breakdown covering cash paid, non-cash consideration such as assumed mortgages or agreed improvements, and the total
- The statutory basis and explanation for any exemption being claimed
Transfers that are wholly exempt based on a family relationship or a public utility easement don’t technically require a Statement of Value, but the Department of Revenue recommends filing one anyway to avoid delays at the Recorder’s office.
The tax itself is paid at the Recorder of Deeds when you present the deed for recording. The Recorder collects the state and local shares together.3Pennsylvania Department of Revenue. Realty Transfer Tax Some counties want the recording fee and the tax as separate checks, both payable to the Recorder of Deeds.10Montgomery County, PA. Recording Requirements Confirm the format with the county office in advance. Plan on an administrative recording fee of roughly $60 to $90 in addition to the transfer tax, depending on the county and document type.
Recording isn’t necessarily the last word. The Department of Revenue can audit the Statement of Value later and issue a formal assessment if it decides the property’s value was understated, sometimes months after closing.
Refunds for Overpaid Tax
If you overpaid the state portion, file Form REV-1651 (Application for Refund of Pennsylvania Realty Transfer Tax) with the Department of Revenue.11Pennsylvania Department of Revenue. Application for Refund Pennsylvania Realty Transfer Tax You have three years from the date the tax was paid. If the overpayment came from a Department assessment, the window is much shorter: a petition to the Board of Appeals within six months of paying the assessed amount.
The application needs a copy of the deed showing a legible tax stamp, evidence of who actually paid the tax, and documentation supporting the overpayment. If someone other than the original taxpayer is filing, a power of attorney is required.
REV-1651 only covers the state’s 1%. If you overpaid local transfer tax, you have to contact the municipality and the school district separately. The Department of Revenue will not refund the local portion for you.