Understanding Allegheny County’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
When selling a home in Allegheny County, real estate transfer taxes are an important cost to be aware of. These taxes, charged by state and local governments, apply whenever property changes ownership and are typically calculated as a percentage of the sale price.
This guide explains how transfer taxes work in Allegheny County, who pays them, and what sellers can expect to pay. It also covers additional fees, exemptions, and tips to help you plan for these costs during your home sale.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
What are transfer taxes?
Real estate transfer taxes are a fees imposed by state or local governments when ownership of a property is transferred from one party to another. According to the Federal Trade Commission, these taxes apply at the time of sale and are based on the transfer of the title, which represents the legal ownership of the property.
The amount owed in transfer taxes varies depending on where the property is located, as each state, county, or city sets its own tax rates and rules. These taxes, like others, are designed to generate revenue to fund public services and government operations.
Who pays for transfer taxes?
In Pennsylvania, real estate transfer taxes are owed individually by both the buyer and seller (or grantor and grantee).
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in Pennsylvania.
Pennsylvania levies its real estate transfer tax at a rate of 1 percent on the value of real estate (including contracted-for improvements to property) transferred by deed, instrument, long-term lease, or other writing.
County transfer taxes
The Allegheny County realty transfer tax ranges from 2%-5% of the total consideration of a property, with 1% submitted to the State and the remainder going to the Municipality and School District for the property.
Other transfer fees
Starting February 1, 2020, the City of Pittsburgh began applying a 5% transfer tax rate to all residential property deeds recorded, regardless of whether the documents, execution, notarization, or sales agreement date back to 2019. For commercial properties, this 5% rate took effect on April 1, 2020, following the same guidelines.
Are transfer taxes deductible?
Unfortunately, transfer taxes cannot be deducted on your income tax return. However, they may still help reduce your tax liability in another way.
When calculating capital gains—the profit made from selling your property—you can treat transfer taxes as part of your selling costs. According to the IRS guidelines, these costs can be subtracted from the home’s sale price, which lowers the taxable profit from the sale. This can help reduce the amount owed in capital gains taxes, easing some of the financial burden of selling your home.
Transfer tax exemptions
In Pennsylvania, transfer tax exemptions may apply that can significantly reduce the financial burden on property transactions.
Depending on the specific circumstances and location within the state, some sellers might be eligible for these exemptions. Here’s a breakdown of scenarios where real estate transfers may not incur a realty transfer tax:
- Transfers among family members, including both gifts and sales of property.
- Transfers to governmental units or between religious organizations.
- Transfers to shareholders or partners, as well as to and from nonprofit industrial development agencies.
- Deeds to burial sites.
- Certain transfers that involve ownership changes in real estate companies and farms.
- Property passed through testate (with a will) or intestate (without a will) succession.
Estimating transfer taxes for your home sale
To get a quick estimate of what you might earn from selling your home in Allegheny County, try HomeLight’s Net Proceeds Calculator. This tool factors in essential costs like transfer taxes, agent fees, and potential renovations, helping you gauge your overall financial outcome.
For a more detailed assessment of transfer taxes and other closing costs, consulting a top real estate agent is highly recommended. A knowledgeable agent can explain how transfer taxes apply to your sale and even help you navigate negotiations, as these costs are sometimes shared or adjusted depending on the market. Starting these conversations early with your agent ensures you’re fully prepared for the financial aspects of closing your sale.
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