Q. What are transfer taxes?
A. Transfer taxes are charged when a property is sold. The state of Pennsylvania charges 1% of the sales price and then the counties levy an additional tax. In the areas surrounding Philadelphia (i.e. Montgomery, Bucks, Delaware, Chester, and Berks), the counties charge 1% for a total transfer tax of 2% (state and county combined). The cost of the transfer tax is usually split evenly between the buyer and the seller.
In Philadelphia however, the county charged a 3% transfer tax. Beginning Jan 1, 2017, Philadelphia raised the transfer tax to 3.1% for a total 4.1% tax on all real estate transactions.
These taxes drive up the closing costs for both buyers and sellers in a real estate transaction.
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