Sticker shock at closing is real in Philadelphia, especially in 19106 where many luxury homes trade above seven figures. You want a clear number for cash to close and a strategy that helps you win without overpaying. In this guide, you’ll learn exactly how the city’s transfer tax works, who usually pays what, and how to structure offers on $1M–$5M properties. Let’s dive in.
Philadelphia transfer tax basics
Philadelphia imposes two realty transfer taxes on most property sales: a Pennsylvania state tax and a City of Philadelphia tax. The tax is calculated on the total consideration shown on the deed, which is usually the contract sale price. The settlement agent collects it at closing when the deed is recorded. Allocation of who pays is negotiable and should be written into your contract.
Current rates and quick math
As of June 2024, the combined rate is 4.278 percent of the sale price. That reflects State at 1.00 percent and City at 3.278 percent. Always confirm current rates with the City of Philadelphia Department of Revenue and the Pennsylvania Department of Revenue before you make an offer. Small changes in the rate create large dollar swings at luxury price points.
Who pays at closing in practice
There is no law that forces buyer or seller to pay a specific share. The purchase agreement controls. In Philadelphia, you will see several common allocations:
- Seller pays all transfer tax.
- Split by component: seller pays the 1.00 percent state portion and buyer pays the 3.278 percent city portion.
- Buyer pays all transfer tax to strengthen an offer.
- A simple 50/50 split.
If your contract is silent, the settlement agent will ask for clarification and may follow local custom. To avoid confusion, include a clear clause that names who pays each portion.
Luxury price examples at a glance
The numbers below show how material this tax is at higher price points. All figures use the combined 4.278 percent and are rounded.
If one party pays the full tax:
- $1,000,000 → $42,780 total
- $2,000,000 → $85,560 total
- $3,000,000 → $128,340 total
- $4,000,000 → $171,120 total
- $5,000,000 → $213,900 total
Common split: buyer pays City (3.278 percent), seller pays State (1.00 percent)
- Buyer city share: $32,780 at $1M; $65,560 at $2M; $98,340 at $3M; $131,120 at $4M; $163,900 at $5M
- Seller state share: $10,000 at $1M; $20,000 at $2M; $30,000 at $3M; $40,000 at $4M; $50,000 at $5M
50/50 split of the full tax
- $21,390 each at $1M; $42,780 each at $2M; $64,170 each at $3M; $85,560 each at $4M; $106,950 each at $5M
How allocation shapes your offer strategy
At $1M–$5M, transfer tax is a major line item. If you are bidding in a competitive 19106 scenario, offering to cover the city portion or all taxes can make your offer stand out. In a softer market, you can often negotiate for the seller to cover more of the tax.
You can also use price and allocation together. For example, you might offer a slightly higher price while asking the seller to pay the transfer tax. This can alter loan amounts and appraisal comparisons, so run the numbers with your lender and title company before finalizing terms.
Financing, cash, and timing
If you are financing, your lender will expect transfer tax to be paid at closing and shown on your Closing Disclosure. Some lenders limit how costs can be credited or capitalized. Coordinate early so your loan structure aligns with any seller credits or tax allocations. Cash buyers have more flexibility, but should still obtain an itemized settlement estimate to avoid last‑minute surprises.
Tactics for 19106 luxury buyers
- Put allocation in writing. State who pays the city and state portions in your offer.
- Request a preliminary, itemized settlement statement from the title company before you submit or counter.
- Use net sheets in negotiations. Present seller net proceeds with different allocation scenarios so value is clear.
- Mind appraisal risk. A higher price paired with seller‑paid transfer tax can help you keep cash outlay lower, but it must appraise.
- Keep proof. Ask your settlement agent for evidence of remittance to both the city and state after closing.
Exemptions and special cases
Certain transfers are exempt, such as transfers between spouses, some parent‑child transfers, and transfers involving specific nonprofits or government entities. Each exemption has strict rules and requires documentation. If you believe an exemption applies, alert your title company early and be prepared to provide the required forms well before closing.
Your buyer closing checklist
- Ask the listing agent in writing who is paying the city and state transfer taxes before you submit an offer.
- Confirm current rates with the city and state authorities.
- Obtain a preliminary Closing Disclosure or HUD‑1 from the title company, itemized by line item.
- Include explicit allocation language in the purchase agreement.
- Review the deed and settlement statement at least one week before closing to confirm the transfer tax entries.
- Coordinate with your lender on how transfer tax and any seller credits will be treated in underwriting.
- Budget for other closing costs you will see next to transfer tax: title insurance, recording and municipal fees, prorated taxes, HOA transfer fees if applicable, attorney or settlement fees, and any agreed concessions.
- Request written confirmation that the settlement agent will remit to both the city and state and provide proof after closing.
Move forward with clarity
Understanding Philadelphia’s transfer tax helps you price with confidence, negotiate with precision, and avoid last‑minute friction at the settlement table. If you are targeting luxury property in 19106 or anywhere in the city, the right structure can save you meaningful cash at closing or help you win in a competitive field.
Ready to model your exact cash to close and build a negotiation plan tailored to your goals? Connect with Societe Plus Serhant for a private consultation.
FAQs
What is Philadelphia’s transfer tax for buyers?
- It is a combined city and state tax, currently totaling 4.278 percent of the sale price as of June 2024, collected by the settlement agent at closing and allocated by contract.
How much is transfer tax on a $1M 19106 home?
- At $1,000,000, the total tax is $42,780 if one party pays it all; common splits change who pays which portion but the total remains the same.
Who usually pays transfer tax in Philadelphia?
- It varies by deal. Common outcomes include the buyer paying the city portion and the seller paying the state portion, a full seller pay, a full buyer pay, or a 50/50 split.
Can I negotiate transfer tax in my offer?
- Yes. Allocation is negotiable and should be stated in your contract. In competitive situations, offering to cover more tax can strengthen your position.
Can transfer tax be financed with my mortgage?
- Transfer tax is typically paid at closing and shown on your Closing Disclosure. Discuss any credits or structure with your lender and title company early.
Are there transfer tax exemptions in Philadelphia?
- Yes. Examples include certain spouse and parent‑child transfers and transactions with qualifying nonprofits or government entities. Each requires strict documentation.
When is transfer tax paid during closing?
- At settlement when the deed is recorded. The title or settlement agent collects and remits the city and state portions according to the contract.
