Selling your Old City home and trying to pin down what you will actually take home after closing? The Philadelphia transfer tax can feel like a moving target, especially when you hear different answers about who pays and how much. You want a clear plan so you can price confidently, negotiate smartly, and avoid surprises at the closing table. In this guide, you will learn what the transfer tax is, how it is usually handled in Old City sales, and how to estimate your net with a simple example. Let’s dive in.
What the transfer tax is
A real estate transfer tax is a tax charged on the transfer of title to property. It is calculated as a percentage of the sale price and is collected at closing when the deed is recorded. In Philadelphia, there are two parts to this tax: a Pennsylvania statewide component and a City of Philadelphia component. Together, these form the combined transfer tax that applies to Philadelphia property transfers.
Rates and exemptions can change. Always confirm the current combined percentage and any special rules with the City of Philadelphia Department of Revenue and your title company before you finalize numbers.
Who pays in Old City sales
Who pays the transfer tax is negotiable. The purchase and sale agreement sets out whether the buyer, the seller, or both will pay it. Local custom can shift based on market conditions, and roles can vary by property type and negotiation. In many Philadelphia transactions the seller covers a meaningful share of seller-side closing costs, but this is not automatic.
There are narrow exemptions that can apply, such as certain transfers between spouses or from parent to child, or transfers to exempt entities. Some court-ordered transfers, foreclosures, or transfers to a mortgagee can have different treatment. If you think an exemption might apply, discuss it early with your title company or closing attorney. Also note that FIRPTA withholding for foreign sellers is a separate federal requirement and is not the same as the city or state transfer tax.
How transfer tax affects your net
Transfer tax is often one of the largest seller costs after commissions and any mortgage payoff. To estimate your net proceeds, list out all likely seller-side items and subtract them from your sale price.
Key line items to include:
- Sale price
- Real estate commissions to listing and buyer brokers. Many Philadelphia sales total 5 to 6 percent, but confirm what you have agreed to in your listing agreement
- Transfer tax. Multiply the sale price by the current combined Philadelphia and Pennsylvania transfer tax rate
- Mortgage payoff, including any prepayment fees
- Prorated property taxes and utilities
- Title and settlement costs, including title insurance contributions, settlement fees, and recording fees
- Repairs, required certificates, and any municipal or Licenses and Inspections items
- HOA or condo fees, estoppel or resale certificates, and any prorations or assessments
- Miscellaneous items like staging or moving costs
The quick formula
- Transfer tax = Sale price × Current combined transfer tax rate
- Net proceeds = Sale price − Total seller closing costs
Confirm the current combined rate with the City of Philadelphia Department of Revenue or your title company before you rely on your estimate.
Illustrative net sheet for an Old City sale
The example below shows how the math can look. This is illustrative only. Verify the current transfer tax rate, commission terms, and all costs for your property.
Assumptions:
- Property: Old City condo or rowhome
- Sale price: 700,000 dollars
- Commission: 5.0 percent total, or 35,000 dollars
- Combined Philadelphia and Pennsylvania transfer tax: 3.278 percent example rate
- Mortgage payoff: 200,000 dollars
- Other seller costs: 3,000 dollars for title or settlement fees, prorations, minor repairs, and recording
Calculations:
- Transfer tax: 3.278 percent × 700,000 dollars = 22,946 dollars
- Commissions: 5.0 percent × 700,000 dollars = 35,000 dollars
- Subtotal seller costs: 35,000 + 22,946 + 3,000 = 60,946 dollars
- Net before mortgage payoff: 700,000 − 60,946 = 639,054 dollars
- Net after mortgage payoff: 639,054 − 200,000 = 439,054 dollars
Your numbers will vary based on your commission agreement, the actual transfer tax rate on your closing date, your loan payoff, condo fees, and any repairs or credits.
Old City factors that change costs
Old City’s mix of property types and historic housing can affect your timeline and bottom line. Plan for these early so you can keep your net on track.
- Property type and new construction. Condo conversions and new builds can have different closing allocations or documentation. Confirm how transfer tax and title costs will be split in your contract
- Historic and L and I concerns. Required repairs or a Certificate of Use and Occupancy can come up late if not addressed early. Clearing items ahead of listing helps protect your net and your timeline
- Condos and HOAs. Expect an estoppel or resale certificate fee and possible reimbursement for prepaid assessments. Include HOA, condo, and management fees in your estimate
- Market timing. In a seller’s market, buyers may accept more of the closing costs. In a buyer’s market, you may need to offer concessions, including transfer tax, to secure the best sale outcome
- Tax proration. Property tax and school tax prorations depend on your closing date. Accurate prorations can add or subtract several hundred dollars
How to plan and verify your numbers
- Confirm today’s combined transfer tax rate with the City of Philadelphia Department of Revenue and your title company
- Ask your title company for a draft closing cost estimate that includes transfer tax, title policy, settlement fees, and recording costs
- Review your payoff statement, including per diem interest and any prepayment fees
- If you own a condo, request the resale certificate or estoppel early and confirm fees and timelines
- Discuss current Old City negotiation norms with your listing agent so you can decide how to handle transfer tax in offers
Maximize your net with calm, local guidance
A clear plan lets you price with confidence, set expectations with buyers, and avoid surprises. You can use the example above to model your own sale and then refine with current rates and quotes from your title company. If you want help building a precise net sheet and positioning your Old City home for the strongest outcome, connect with The Josh Allen Team. Our calm, organized process and premium marketing help you protect your time and your net.
FAQs
What is the Philadelphia transfer tax and when is it paid?
- It is a combined city and state tax on the transfer of title, calculated as a percentage of the sale price and paid at closing when the deed is recorded.
Who usually pays the transfer tax in Old City transactions?
- It is negotiable and set by the purchase agreement. Local practice shifts with the market, so confirm current norms with your listing agent.
How do I estimate the transfer tax for my sale price?
- Multiply your sale price by the current combined Philadelphia and Pennsylvania transfer tax rate. Ask your title company to confirm the exact rate for your closing date.
Are there any exemptions from the transfer tax?
- Some transfers, like certain intra-family transfers or transfers to exempt entities, may qualify. Exemptions are specific, so verify eligibility with your title company or closing attorney.
Is FIRPTA the same as the Philadelphia transfer tax?
- No. FIRPTA is a federal income tax withholding for sales by certain foreign sellers. It is separate from the city and state real estate transfer tax.
What other seller costs should I include besides transfer tax?
- Commissions, mortgage payoff, title and settlement fees, prorated taxes and utilities, HOA or condo fees, required certificates or repairs, and miscellaneous items like staging or moving.
