Philadelphia Transfer Tax

When discussing property transactions, understanding the Philadelphia Transfer Tax is crucial. Here’s how it works as of 2025:

✅ Current rates

• The city portion of the tax is 3.578%. City of Philadelphia+2Saul Ewing LLP+2

• The Pennsylvania state portion is 1.0%. City of Philadelphia+1

• Total combined rate: 4.578% of the sale price (or assessed value + any assumed debt) for most transactions. City of Philadelphia+2Philly Mortgage Brokers+2

• The tax is due when the deed (or document transferring title) is presented for recording; payment must occur within 30 days of transfer. City of Philadelphia+1

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🕒 Important timing & change

• The 3.578% city rate became effective July 1, 2025. Before that, the city portion was 3.278% (making the total 4.278%). Philly Mortgage Brokers+2Saul Ewing LLP+2

• Example: On a $400,000 sale, the difference between the old total (4.278%) and the new total (4.578%) adds ~$1,200 in tax. Philly Mortgage Brokers

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📋 Who pays & possible exemptions

• Typically, the tax is split between buyer and seller (each paying ~half), but legally the city can hold either party responsible, so it’s important to clarify in your contract. City of Philadelphia+1

• Exemptions apply in certain cases — for example transfers between spouses, parent to child, siblings (including half or adopted), property transferred by will, etc. But documentation is required. City of Philadelphia+1

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🔍 A few key considerations

• The tax base: It’s calculated on the sale price or the assessed value (if no sale price exists) plus any assumed debt. City of Philadelphia+1

• For long‐term leases (30+ years), entity transfers where 75%+ interest changes hands, etc., the tax may apply. HomeLight+1

• If payment is late or the transaction was structured to avoid the tax, there can be penalties (up to 50% additional tax) and interest. City of Philadelphia+1

  Where does Transfer Tax money go?

🏛️ 1. State Government Share

A portion of the tax goes to the state, which deposits it into state funds used for things like:

• Affordable housing programs

• Public infrastructure (roads, bridges, schools)

• Community development

• General state revenue

For example, in Pennsylvania, the 1% state realty transfer tax is split between:

• 0.5% to the Commonwealth’s General Fund, and

• 0.5% to the Public Transportation Assistance Fund (used for transit and infrastructure).

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🏙️ 2. Local Government Share

Cities, counties, or municipalities often add their own transfer tax on top of the state’s.
That local portion stays in the community and typically funds:

• Public schools

• Housing and neighborhood improvement programs

• City infrastructure and operations

For example, in Philadelphia, the 3.278% city portion of the tax goes into the City’s General Fund and School District Fund, helping to pay for:

• Public education

• City services

• Community projects

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💡 Summary