Philadelphia Transfer Tax: What Buyers And Sellers Should Know

Buying or selling in Society Hill comes with a line item that surprises many people: Philadelphia’s real estate transfer tax. It is a big number on six‑ and seven‑figure homes, and it directly affects how much cash you bring to closing or how much you take home as a seller. If you understand the rate, who typically pays, and how to estimate your share, you can plan with confidence and negotiate smart.

Below, you’ll find a clear breakdown of current rates in Philadelphia, how the tax is usually split in Society Hill, simple formulas, real examples, and a checklist of what to confirm with your agent and title company. Let’s dive in.

What is the transfer tax?

The transfer tax is a tax on the transfer of title to real property. In Pennsylvania and in the City of Philadelphia, it is collected at settlement by the title company or closing attorney and remitted when the deed is recorded. It is separate from your annual property tax.

Current rates in Philadelphia

• Pennsylvania realty transfer tax: 1.00% of the sale price.
• City of Philadelphia realty transfer tax (most residential transfers to individuals): 3.278%.
• Combined typical rate in Philadelphia: 4.278%.
• Combined rate when the city’s higher corporate rate applies: 4.99%.

Note: City and state rules can change. Always confirm the exact rate for your transaction with your settlement agent and the Philadelphia Department of Revenue before closing.

Who pays in Society Hill?

Legally, who brings funds for transfer tax is negotiable in Pennsylvania. In practice, contract language and local custom decide it.

Here is what you’ll commonly see in Center City and Society Hill:

• Many deals split the tax 50/50 between buyer and seller.
• Some listings advertise that the seller will pay the full transfer tax to attract buyers or speed up a sale.
• New construction and transactions involving corporations or LLCs often spell out a different allocation. The corporate rate can be higher, so parties negotiate this point closely.

Whatever you agree to, make sure the allocation is written into your purchase agreement and appears correctly on your Closing Disclosure or closing statement.

How to calculate your cost

Use this quick formula:

• Total transfer tax = Sale price × combined rate
• For most individual residential transfers in Philadelphia, use 4.278%.
• If splitting 50/50, divide the total by 2 to estimate each side’s share.

Buyer cash to close will include your share of the transfer tax if you agreed to pay part of it. Most mortgages do not allow you to roll the transfer tax in as a separate financed line, but you can negotiate seller credits or adjust price to offset costs, subject to lender limits.

Examples at common price points

These examples show scale and typical splits for Society Hill homes.

Example: $500,000 sale price (individual rate)

• Total at 4.278%: $21,390
  • 50/50 split: Buyer $10,695 | Seller $10,695
  • Seller pays all: Seller $21,390 | Buyer $0
• Corporate rate 4.99%: $24,950 (allocation per contract)

Example: $750,000 sale price (individual rate)

• Total at 4.278%: $32,085
  • 50/50 split: Buyer $16,043 | Seller $16,043
  • Seller pays all: Seller $32,085 | Buyer $0
• Corporate rate 4.99%: $37,425 (allocation per contract)

Example: $1,500,000 sale price (individual rate)

• Total at 4.278%: $64,170
  • 50/50 split: Buyer $32,085 | Seller $32,085
  • Seller pays all: Seller $64,170 | Buyer $0
• Corporate rate 4.99%: $74,850 (allocation per contract)

Impact on seller net proceeds

For sellers, transfer tax is one of the larger single line items at closing. A quick framework:

• Approximate net = Sale price − mortgage payoff(s) − commissions − your share of transfer tax − other seller costs (title, prorations, attorney) − agreed credits/repairs.
• Example at $750,000: if you agree to a 50/50 split, plan for about $16,043 toward transfer tax. If you agree to pay it all, plan for about $32,085.

Your title company’s draft closing statement will list the exact transfer tax amount and your share. Review it early so you can adjust expectations or negotiate credits before final sign‑off.

Buyer cash to close

Your cash due at closing often includes:

• Down payment
• Buyer closing costs (loan fees, title, recording)
• Your share of transfer tax if you agreed to pay part
• Prepaids and prorations (insurance, taxes)
• Minus any seller credits

Ask your lender and agent for an early estimate that shows the transfer tax line, then update after you lock the contract terms.

Exemptions and special cases

Some transfers may be exempt or taxed differently. Common examples include certain transfers between spouses, transfers incident to divorce, transfers to government entities or qualifying nonprofits, and some fiduciary, estate, or foreclosure transfers. Parent/child transfers or gifts may qualify under specific rules and affidavits.

There is no broad first‑time homebuyer transfer tax exemption in Philadelphia. If you believe an exemption applies to your situation, discuss it with your agent and settlement company early and be ready to provide supporting documentation at closing.

When and how it is collected

• The tax is collected by the settlement agent at closing and is typically due when the deed is recorded.
• The title company prepares and files the required state and city forms and remits payment to Pennsylvania and to the City of Philadelphia.
• If you claim an exemption, the required documentation must be provided at closing to avoid interest or penalties later.

Listing language and negotiations

You will often see “seller pays transfer tax” in listing remarks when a seller is offering to cover it. If the seller expects a 50/50 split or for the buyer to pay, that should be clear in the agreement. In a competitive Society Hill listing, buyers sometimes offer a higher price while asking for a shared or seller‑paid transfer tax to balance cash at closing.

Buyer checklist

• Confirm the current combined rate for your contract type (individual vs corporate).
• Clarify who pays what in the agreement; look for a 50/50 split or seller‑paid language.
• Ask your lender for a Closing Disclosure estimate that shows your transfer tax line.
• If an exemption may apply, tell your agent and title company immediately.
• If you are buying as an LLC or corporation, confirm which rate applies and how it affects your cash to close.

Seller checklist

• Decide your strategy: offer 50/50, pay it all, or negotiate based on market conditions.
• Request a seller net sheet that includes your assumed share of transfer tax.
• Confirm the correct rate with your title company for your buyer type (individual vs entity).
• If you plan to claim an exemption, gather documentation early for closing.
• Make sure the allocation is correct on the draft closing statement before signing.

Work with a local expert

Society Hill transactions often involve condos, historic townhomes, and in some cases entities or estates. The transfer tax can shift thousands of dollars between the parties, so the right strategy and clear paperwork matter. If you want a custom estimate for your address and guidance on the best way to structure your offer or listing terms, let’s talk.

Ready to map out your numbers and plan your next move in Society Hill? Connect with Tom Englett for a consultative walkthrough and a tailored closing cost or net proceeds estimate.

FAQs

What is Philadelphia’s combined transfer tax rate for most Society Hill home sales?

• The typical combined rate is 4.278% of the sale price (1.00% state plus 3.278% city) for transfers to individuals.

Who usually pays the transfer tax in Center City and Society Hill?

• It is negotiable, but many deals split it 50/50; some sellers offer to pay it all to strengthen their listing.

How do I estimate my share of transfer tax as a buyer?

• Multiply the sale price by 4.278% to get the total, then apply the agreed split (for 50/50, divide by 2); confirm with your lender and title company.

Is there a first‑time homebuyer transfer tax exemption in Philadelphia?

• There is no broad first‑time homebuyer exemption for the transfer tax in Philadelphia; ask your title company about any specific programs or exemptions.

What happens if the buyer or seller is an LLC or corporation in Philadelphia?

• The city portion can be higher for corporate transfers, bringing the combined rate to about 4.99%; confirm the rate and negotiate allocation in the contract.

When is transfer tax paid and who files the paperwork in Philadelphia?

• The title company collects the tax at closing and files the required state and city forms when the deed is recorded.