In Pennsylvania, the mortgage recording tax (mortgage registry tax) is:
Audio Lesson
Duration: 2:36
Question & Answer
Review the question and all answer choices
Not applicable
1% of the debt amount
This option incorrectly suggests a 1% tax rate, which might reflect rates in other states but doesn't apply to Pennsylvania. Students often confuse Pennsylvania with neighboring states that do have mortgage recording taxes.
2% of the debt amount
This option suggests a 2% tax rate, which is higher than most states' rates and doesn't apply to Pennsylvania. This may reflect a misunderstanding of maximum tax rates in other jurisdictions.
Varies by county
This option incorrectly suggests variability by county, which might apply to other recording fees but not to Pennsylvania's mortgage recording tax (which doesn't exist).
Why is this correct?
CORRECT_ANSWER
Deep Analysis
AI-powered in-depth explanation of this concept
Understanding recording taxes is crucial for real estate professionals as they directly impact transaction costs and client expectations. This question tests knowledge of Pennsylvania's specific tax regulations, which differ significantly from many other states. The core concept is identifying whether Pennsylvania imposes a mortgage recording tax, which is a state-level tax on the creation of a mortgage lien. The correct reasoning process involves recognizing that while many states have such taxes (often ranging from 0.1% to 2%), Pennsylvania is among the minority that doesn't. The question is challenging because it requires knowledge of exceptions rather than general rules, as most states do have some form of mortgage recording tax. This connects to broader real estate knowledge about state-specific regulations that affect closing costs and transaction structures across different markets.
Knowledge Background
Essential context and foundational knowledge
Mortgage recording taxes (also called mortgage registry taxes) are state-imposed taxes on the creation of mortgage liens on real property. These taxes generate revenue for states and are typically paid at closing. Most states have some form of this tax, with rates varying widely. Pennsylvania is one of the few states that does not impose a mortgage recording tax on residential mortgages, though it does have nominal recording fees that apply to all recorded documents. This absence of tax can make Pennsylvania's real estate market more attractive to borrowers compared to neighboring states with higher tax burdens.
PA's the way, no mortgage tax to pay
Recite this rhyme when encountering questions about Pennsylvania's mortgage taxes to remember they don't exist
When encountering questions about state-specific taxes, remember that Pennsylvania is an exception with no mortgage recording tax. Other states typically have some form of this tax.
Real World Application
How this concept applies in actual real estate practice
A buyer from New Jersey is considering purchasing a property in Pennsylvania and is comparing mortgage options. Their lender provides a Good Faith Estimate showing significantly lower closing costs than their previous Pennsylvania transaction. The buyer asks their agent why Pennsylvania closing costs are lower. The agent explains that Pennsylvania doesn't have a mortgage recording tax, unlike New Jersey's 1.4% tax, which saves them thousands of dollars at closing. This competitive advantage makes Pennsylvania's real estate market more attractive to buyers and investors from neighboring states.
More Real Estate Financing Episodes
Continue learning with related audio lessons
Maryland recording requirements for mortgages include:
2:13 • 0 plays
Veteran uses Cal-Vet residential loan program with installment sales contract. Who gives deed to property?
2:42 • 0 plays
In Massachusetts, deficiency judgments after foreclosure:
2:48 • 0 plays
Foreclosure in Wisconsin is typically:
2:32 • 0 plays
Maryland's right of redemption is:
2:43 • 0 plays
Ready to Ace Your Real Estate Exam?
Access 2,499+ free podcast episodes covering all 11 exam topics.