In Pennsylvania, transfer tax is typically paid by:
Question & Answer
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The buyer only
Placing the entire transfer tax burden on the buyer alone is not the Pennsylvania custom or legal default; it would also make transactions less competitive for sellers, who benefit equally from the transfer of title.
The seller only
Making the seller solely responsible for the entire transfer tax is also not Pennsylvania's customary or default rule, even though sellers do bear significant closing costs in other areas such as real estate commissions.
Split equally between buyer and seller
The lender
Lenders are not parties to the transfer of title between buyer and seller and have no legal obligation to pay realty transfer tax; their role is limited to financing the purchase, not funding government transfer taxes.
Why is this correct?
Under Pennsylvania custom and standard practice codified in the Real Estate Seller Disclosure Law and reinforced by standard purchase agreements used statewide, the transfer tax is split 50/50 between buyer and seller, with each party paying 1% of the purchase price when the combined rate is 2%. This equal split is so deeply embedded in Pennsylvania practice that it is included as a default term in the standard PAR (Pennsylvania Association of Realtors) Agreement of Sale. While parties can negotiate otherwise, the default and most common outcome is an equal division.
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