Philadelphia Transfer Tax, Closing Costs & Montgomery Comparison

Are you comparing homes in Montgomery County and inside the Philadelphia city limits, but confused by the different transfer taxes and closing costs? You’re not alone. These line items can shift your budget, your net proceeds, and even your negotiation strategy. In this guide you’ll learn what transfer tax is, how it’s usually split, how closing costs differ between Montgomery County and Philadelphia, and how to estimate your total with a simple example. Let’s dive in.

Transfer tax basics in Pennsylvania

Transfer tax is a tax on the transfer of real property. It is assessed when the deed is recorded and is usually a percentage of the sale price, also called the consideration.

In Pennsylvania, the framework is layered. You have a statewide component and one or more local components. In Montgomery County, you’ll typically see a state portion plus a county portion, and sometimes a small municipal piece. Inside the City of Philadelphia, the city administers its own transfer tax system with its own forms and procedures.

The result for you is simple. A closing in Montgomery County follows the standard Pennsylvania model. A closing in Philadelphia follows city rules that have historically carried a higher combined transfer tax than many suburban counties.

Who usually pays what

Transfer tax payment is a contract item. You and the other party can negotiate the split and spell it out in the agreement of sale.

• In much of suburban Pennsylvania, including Montgomery County, the combined transfer tax is often split 50-50. Some deals vary based on local practice and negotiation.
• In Philadelphia, sellers have often paid most or all of the city transfer tax, but this is also negotiable and shifts with market conditions and local custom. Always confirm current practice with your title company or local broker before you sign.

Some transfers may be exempt or treated differently. Examples include transfers between spouses, certain intra-family transactions, deeds into specific trusts, some nonprofit or government transfers, and court-ordered transfers. Exemptions require documentation and, in some cases, preapproval.

Montgomery County vs. Philadelphia: what changes

While the mechanics are similar, there are important differences when you cross the city line.

• Rate structure: Montgomery County uses the standard Pennsylvania layered approach. Philadelphia has its own city transfer tax schedule and administration that has historically been higher than suburban rates.
• Administration: In Montgomery County, title companies collect the tax at closing and remit through county and state procedures. In Philadelphia, you must follow City Department of Revenue procedures and city-specific forms.
• Paperwork: Both locations require transfer tax affidavits, but Philadelphia uses city-specific affidavits and may require additional documents.
• Practical impact: Higher nominal city transfer taxes can add thousands to seller costs or buyer funds needed to close. This often influences asking price, credits, or how you negotiate the transfer tax split.

If you’re selling in Philadelphia and buying in Montgomery County (or the other way around), make sure your net sheet reflects the correct jurisdiction. The transfer tax alone can change your bottom line.

Common closing costs at a glance

Here are typical line items you may see on a closing disclosure in either area. Amounts and who pays can vary by contract and local practice.

• Transfer taxes (state, county, municipal, or city). Often split or negotiated.
• Real estate commission (seller). Often the largest seller cost and quoted as a percentage of the sale price.
• Title insurance. Owner’s policy is sometimes paid by the seller or buyer depending on market custom. Lender’s policy is usually paid by the buyer when there is a loan.
• Recording and deed preparation fees. Modest fixed fees based on local schedules.
• Settlement/closing agent fees. Charged by the title company or settlement attorney.
• Courier, overnight, and affidavit fees. Smaller administrative line items.
• Prorations. Property taxes, HOA or condo fees, and utilities are prorated to the settlement date.
• Buyer loan costs. Origination, appraisal, credit report, discount points, underwriting, and related items.
• Inspections and repairs. Who pays depends on the agreement of sale and any negotiated credits.

Example net sheet with hypothetical numbers

Use this as a framework only. Insert your real sale price, your actual local transfer tax rate, and the allocation you agree to in your contract. The combined transfer-tax rates shown here are hypothetical and for illustration.

Net to seller example using the Montgomery County hypothetical rate:

• Start with sale price: $400,000
• Subtract commission: −$24,000
• Subtract transfer tax (2.00% hypothetical): −$8,000
• Subtract mortgage payoff(s): −$200,000
• Subtract seller title/settlement fees: −$1,500 (example total)
• Add/subtract prorations: −$1,200
• Example net to seller: $165,300

Alternative scenario: If this same property were in Philadelphia and the seller paid the higher city transfer tax (hypothetical 3.28%), replacing $8,000 with $13,120 would increase seller costs by $5,120 and reduce net by the same amount.

How to estimate your total

Follow these steps to build a reliable working estimate before you make an offer or set an asking price.

1. Confirm the location and jurisdiction. City or township boundaries determine which rules apply. If the property is in Philadelphia, city procedures and rates apply.
2. Find the current transfer tax rates. Use official sources for the state portion and for local county, municipal, or Philadelphia city rates. Rates can change.
3. Decide the transfer tax split. Negotiate the allocation in your agreement of sale and reflect it in the estimate.
4. Request a preliminary closing disclosure. Ask your title company or settlement attorney to draft an early estimate once you are under contract.
5. Get your lender’s loan estimate. This will capture lender fees, appraisal, points, and other mortgage costs on the buyer side.
6. Add title insurance and settlement fees. Your title company can quote owner’s and lender’s title premiums and settlement charges.
7. Include prorations and payoffs. Ask for current property tax figures, HOA balances, and mortgage payoff statements.

Verify current rates and forms

Before you finalize a budget or sign a contract, verify the exact rates and procedures with:

• Pennsylvania Department of Revenue for statewide realty transfer tax guidance and forms.
• City of Philadelphia Department of Revenue for city transfer tax rates, affidavits, and remittance rules.
• Montgomery County Recorder of Deeds and Treasurer for local recording fees, forms, and any municipal add-ons.

You can also ask your title company or settlement attorney to confirm local practice for who pays what and to prepare a preliminary HUD-1 or Closing Disclosure early in the process.

Tips for buyers

• Budget by jurisdiction. A home inside Philadelphia can carry higher transfer tax, which increases funds needed to close.
• Nail down the split early. Put the transfer tax allocation in the offer so your lender and title company can price accurately.
• Compare title quotes. Title premiums are regulated, but settlement and ancillary fees vary. Get a written quote.
• Watch prorations. Settlement dates near a tax due date can change your credits or cash to close.

Tips for sellers

• Model both scenarios. If you are weighing a Philadelphia sale versus a Montgomery County sale, run two net sheets and compare the difference line by line.
• Factor custom into pricing. In markets where sellers commonly cover more of the transfer tax, adjust your list-price strategy and concessions accordingly.
• Clear liens early. Order payoff statements and resolve any judgments to avoid delays and rush fees at closing.
• Plan for municipal requirements. Philadelphia may require city-specific affidavits or certificates for certain transactions. Build time into your timeline to gather documents.

Quick glossary

• Transfer tax: The tax on transferring real property, usually a percentage of the sale price, collected at closing and paid when the deed is recorded.
• Recording fee: A fee charged to record documents like deeds and mortgages with the county or city.
• Title insurance: One-time premium at closing that protects the owner and/or lender against covered title defects.
• Settlement/closing agent fee: The fee paid to the title company or settlement attorney to conduct the closing and disburse funds.
• Prorations: The fair division of property taxes and other recurring charges based on the settlement date.
• Earnest money deposit: The buyer’s good-faith deposit credited toward closing.
• Transfer tax affidavit/recording stamp: Jurisdictional forms and stamps showing transfer tax paid or claiming an exemption.
• Lien payoff: The payment required to release mortgages or other liens at closing.
• Seller concession: A negotiated amount the seller pays toward buyer closing costs or repairs.
• Property tax certification: A local confirmation of tax status and amounts used at closing.
• Use and occupancy certificates: Some municipalities require occupancy or use certificates. Philadelphia has its own programs and certificates for certain property types.

How we can help

You should not have to guess how transfer taxes and closing costs will affect your move. As a neighborhood-focused team serving Roxborough, Manayunk, East Falls, Mount Airy, Montgomery County, and nearby Main Line communities, we’ll help you estimate costs early, set a smart price or offer strategy, and coordinate with your title company so there are no surprises at the closing table.

Ready to run your numbers and build a clear plan? Let’s connect through Kershaw Real Estate. We’ll walk you through a custom net sheet and local next steps today.

FAQs

Who pays transfer tax in Pennsylvania and Philadelphia?

• It is negotiable and goes in the agreement of sale. In suburban counties like Montgomery, a 50-50 split of the combined transfer tax is common. In Philadelphia, sellers often cover most or all of the city transfer tax, but customs change with the market.

How much does transfer tax add to closing costs on a typical home?

• Use the formula sale price × combined transfer tax rate. Even small rate differences matter. For example, 1 percent of $300,000 is $3,000, while 3 percent is $9,000.

Where can I confirm the exact transfer tax rate for my address?

• Check the City of Philadelphia Department of Revenue for city transactions, and the Pennsylvania Department of Revenue plus the Montgomery County Recorder/Treasurer for county and state portions. Your title company can also prepare a preliminary closing disclosure.

Are there exemptions that reduce transfer tax in this area?

• Yes. Examples include transfers between spouses, certain intra-family transfers, deeds into specific trusts, some nonprofit or government transfers, and court-ordered transfers. Documentation and, in some cases, preapproval are required.

Will a higher Philadelphia transfer tax affect my mortgage approval?

• Lenders expect you to cover closing costs as shown on the loan estimate. In Philadelphia, a higher city transfer tax can increase funds needed to close, so make sure your lender and title company include accurate amounts early.