United States: Guide To: Philadelphia Real Estate Transfer Tax Exemptions

Last Updated: June 25 2019
Article by Rabinovich Sokolov Law Group

Are you looking to transfer property in the Philadelphia area? You should be aware that typically, there are both state and local transfer taxes associated with this type of transaction, in addition to recording fees. Effective October 1, 2018, the transfer tax for the city of Philadelphia is 3.278%, with an additional state of Pennsylvania tax of 1%, for a total of 4.278%. This transfer tax is traditionally split between the buyer and the seller (with each party paying half) and becomes payable when the property deed or another document showing ownership is filed with the Record of Deeds Department. While this tax adds an extra expense to transferring property, there are a number of transfer tax exemptions available, which may allow you to avoid paying the tax. Philadelphia law currently recognizes twenty-eight exemptions in total. Below are a few of the more notable exemptions:

FAMILY MEMBERS

One of the most popular transfer tax exemptions is the intra-family exemption. Philadelphia Code § 19-1405(6) exempts transfers between:

§ Husband and wife

§ A divorced couple (pursuant to the divorce decree)

§ Parent and child (or the child's spouse)

§ Brother or sister (or their spouse)

§ Grandparent and grandchild (or the grandchild's spouse)

§ Any life partners (who are members of a Life Partnership that is verified pursuant to applicable law)

There are some differences between city (Philadelphia) exemptions and state (Pennsylvania) exemptions. For example, here you should be aware that state exemptions do not currently embrace a transfer between life partners, so you would still be subject to the applicable 1% state transfer tax. Also note that neither local nor state law permits exemptions on transfers between cousins or aunts/uncles to nieces/nephews. You would be required to pay transfer taxes in that scenario. You should also be aware that to claim the intra-family exemption, the city of Philadelphia requires documents verifying the relationship (i.e. birth certificate, marriage license, etc.).

Additionally, property passing through a will or intestate succession, transferred for no or nominal consideration is exempt from the tax per Section 7 of the applicable Philadelphia Code.

Finally, transfers between family members of an ownership interest in a real estate company are also exempt. Phila. Code § 19-1405(18).

RELIGIOUS ORGANIZATIONS, INTERESTS IN NONPROFIT HOUSING

If you are a religious organization or other nonprofit corporation, chances are you may be eligible for a transfer tax exemption. Section 15 of the applicable code provides that transfers between religious organizations or other persons/entities holding title for religious organizations are exempt from the transfer tax. This is provided that the property has not been used by the transferor for commercial purposes. Section 21 excludes transfers of interest in stock, a proprietary lease, or an occupancy agreement in a cooperative housing corporation or other organization established for the purpose of transferring interests in property on a not for profit basis.

Additionally, a transfer to or from a nonprofit housing corporation that has been incorporated by officials of Philadelphia for the purpose of promoting the development of low cost housing in the city is exempt from the tax. To take advantage of this exemption, the transfer cannot be to a for-profit grantee or to a person who does not qualify as a low to moderate income person. Finally, Philadelphia also exempts a transfer to a nonprofit housing organization where the nonprofit intends to renovate the property and transfer it within three years to an eligible transferee.

COMMON MISCONCEPTION

There is a common misconception that transfers are tax exempt if you are the owner of an LLC and you transfer the property from yourself to your own LLC or vice-versa. This is not the case, and interested parties must identify a specific provision in the Philadelphia Code if they are looking to claim they are exempt. However, there may be some exceptions to this rule.

RECORDING FEE

In addition to paying the transfer tax, there are city and state recording fees attached to most real estate documents. For example, the recording fee for a deed will come to a total of $256.75. Visit the Department of Records' website to view the recording fees for other documents.

CONCLUSION

The Philadelphia transfer tax can add a substantial cost to many real estate transactions. It is important to know when you may be eligible for one of the many transfer tax exemptions. Our offices can work with you to determine if your real estate transaction may qualify, and can help you take the necessary steps to create and record your deed and claim the exemption.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions