A Few Words About Real Estate Transfer Taxes in Pennsylvania

 

Transfers of real estate in Pennsylvania are subject to a state tax of 1% of the value of the real estate, 72 P.S. § 8102-C. Traditionally the payment of the tax is equally split between the transferor and the transferee. However, the parties to the transfer may agree between themselves to split payment differently. Nevertheless, no matter how the parties agree to split payment of the tax, the Commonwealth may proceed against either or both of them to enforce payment of the tax.

Certain transactions are exempt from the tax, 72 P.S. § 8102-C.3including certain transfers between family members. One point of note in this regard is that the Pennsylvania Department of Revenue regulations concerning the tax define children only as children by natural birth or adoption and specifically exclude stepchildren and children of parents whose parental rights have been terminated.

Also, in addition to the state tax, local governmental authorities in Pennsylvania may impose additional real estate transfer taxes, 72 P.S. § 8101-D.  Both the local municipal authority, e.g. borough or township, and the local school district may impose a tax. These taxes are subject to the same exclusions as the state tax.  The rates of these taxes vary from locality to locality in Pennsylvania.  Presently, in Bedford County Pennsylvania, a .5% tax is imposed by the municipality and a .5% tax by the school district, resulting in a total local tax of 1%, which when added to the state tax of 1%, results in Bedford County real estate transfers being subject to a total of 2% realty transfer taxes.