While Pennsylvania does not have a mortgage tax or revenue stamps, it does have a realty transfer tax. When buying property, the tax is the responsibility of both the seller and the buyer. The tax is usually split between both participants.
Splitting the tax is usually easy because it often amounts to 1 percent for the state and 1 percent for local government and schools.
However, some localities can increase the tax, leaving a bigger bill.
How the tax is collected
The tax is collected by the county Recorder of Deeds who then pays the state Department of Revenue its 1 percent fee. Local municipalities have the option to share the tax with local school districts.
Most of the state portion of the tax goes into the general fund to be used on projects throughout the state. However, 15 percent of the state’s portion goes to the Keystone Recreation, Park and Conservation Fund.
Mortgage refinancing is not taxed unless there is an ownership change. Some real estate transfers are exempt from the tax:
- Some transfers among family members
- Some transfers to government
- Transfers between religious organizations
- Deeds to burial sites
- Some transfers between real estate companies
- Transfers to shareholders and partners
- Transfers to or from nonprofit industrial development organizations
- Farms and property passed by testate or intestate succession
In almost every county and city in Pennsylvania, 1 percent of the tax goes to the state, half a percent goes to local schools and half a percent goes to local governments.
This is not the case in Luzerne County. The state gets 1 percent, the county gets half a percent and the schools get half a percent, for a total of 2 percent. The amount going to school districts in the rest of the county varies:
- In Pittson, the district gets 2 percent, for a total tax of 3.5 percent
- In Wilkes Barre, the district gets 2 percent, for a total of 3.5 percent
- In Hazleton, the district gets 1 percent, for a total of 2.5 percent
- In Kingston Borough, the district gets 1 percent, for a total of 2.5 percent
The tax is based on the property’s actual monetary worth using the same figure used for local real estate tax purposes and adjusted to the market value.