Pennsylvania

Pennsylvania has a notably high real estate transfer tax structure: 1% at the state level plus a 1% local component (split between municipality and school district in most areas), customarily split 50/50 between buyer and seller. On a $400,000 sale, the combined 2% transfer tax produces $8,000, with each side paying $4,000. The local component varies, most areas combine to 2% total, but Philadelphia is meaningfully higher at 4.278% combined (3.278% city + 1% state), making it one of the most expensive transfer-tax jurisdictions in the country.

Closings are typically handled by title companies, with attorneys involved on a case-by-case basis. Pennsylvania is not an attorney-required state for residential closings, but real estate attorneys are common, especially in Philadelphia and Pittsburgh.

What property taxes look like

Pennsylvania property taxes are administered at the local level (county, school district, and municipality) with significant variation across the state. Effective rates run from under 1% in some rural counties to over 2.5% in some urban and suburban areas, with school district levies typically the largest single component.

The homestead exclusion in Pennsylvania is a school-district-level reduction in assessed value, separate from the homeowners' tax exemption in some other states. The amount varies by district and is typically small ($300–$1,000/year in tax savings), but it's worth filing, the application is short and free, with deadlines varying by district.

Some Pennsylvania counties run on base-year assessment systems where assessed values reflect historical (sometimes decades-old) market values, with annual ratios applied to translate to current taxable values. This produces apparent assessed-value figures that look very low relative to market value, with the multiplication factor doing the work of bringing the tax bill to the actual rate. New buyers in these counties can find the assessment math confusing the first time they encounter it.

What buyers should know

The standard Pennsylvania residential purchase contract (the PAR Standard Agreement, published by the Pennsylvania Association of Realtors) is widely used. Inspection contingencies typically run 10–15 business days. Earnest money is typically 1%–3% of purchase price, held by the listing brokerage or title company.

The buyer's share of the 2% transfer tax (1% on a $400,000 home is $4,000) is one of the larger buyer closing costs after title insurance and prepaids. In Philadelphia at 2.139% buyer share on a $400,000 home, that's $8,556 in transfer tax alone.

Title insurance is not state-promulgated in Pennsylvania; premiums vary by insurer. The owner's policy is customarily paid by the buyer.

What sellers should know

Sellers face the symmetric 1% state-and-local transfer-tax burden on most transactions, or the equivalent buyer-paid layer in Philadelphia (where the seller pays roughly 2.139% in transfer-tax stack).

Required disclosures include the Pennsylvania Seller's Property Disclosure Statement, covering known material defects, environmental conditions, prior repairs, and HOA matters. Pennsylvania case law treats failure to disclose known material defects as a basis for rescission and damages, so the disclosure form is consequential.

Pennsylvania state cap-gains tax is 3.07% (flat rate). Sellers with significant gains pay federal LTCG + 3.07% PA + 3.8% NIIT (for high earners), combined federal-and-state-and-NIIT effective rates around 22%–27% on the taxable portion above the § 121 exclusion.

How closing typically works

Closings happen at the title company's office in most Pennsylvania transactions, with buyer, seller, agents, and any attorneys present. The title company prepares the closing disclosure (alongside the lender), the settlement statement, and the deed. After signing and wire transfers, the deed and the mortgage record at the county recorder of deeds. The full process typically takes 1–2 hours.

For contract-language questions or complex transactions (estates, divorces, partnership sales), a Pennsylvania-licensed real estate attorney can review the language and represent the relevant party at closing. For routine residential transactions in non-Philadelphia counties, the title company's closing officer is often the only professional needed at the closing table.