What Types of Taxes Do You Pay When Selling a House In PA?

When selling a house in Pennsylvania there are two main categories of tax that typically apply:

  1. Capital Gains Tax
  2. Transfer Tax

This article will breakdown each of these two into more detail and help you estimate what you might owe when selling your own house.

However, before we get too far, it is important to point out that it is possible that there may be additional tax implications for selling your home that are not considered here.

Consulting a licensed attorney or CPA would provide the most comprehensive understanding of your potential tax liability – especially if you believe that there are some uncommon taxes related to the sale of your property.

As we work our way through capital gains and transfer tax, I will provide examples assuming a subject property location of Philadelphia, PA.

Philadelphia is an area that my team and I have the best understanding and knowledge of.  We know the tax landscape fairly well and can speak definitively on what to expect.

Our company buys houses with cash in Philadelphia, which means we see the settlement statements on hundreds of transactions a year.  If there is any tax we know really well, it would be that generated from the sale of homes in Philadelphia.

Capital Gains Tax In Pennsylvania

Capital gains tax is not unique to real estate.  In fact, you can trigger capital gains tax at both the federal and state level on any income or gain you earn from all different kinds of investments and transactions:

  1. Real estate
  2. Stocks
  3. Crypto
  4. Gold and Silver
  5. Antiques
  6. Businesses

If you sell a home in Pennsylvania for more than your cost basis, then there are two types of capital gains tax that could trigger:

Federal Capital Gains Tax & PA State Capital Gains Tax.

Let’s jump into both to see what they mean.

Your capital gains tax rate is a function of your income level and other personal filing attributes.  It can fall anywhere between 0% and 28%.  On average, homeowners who sell their homes may be subject to 15% federal capital gains tax.

Federal Capital Gains Tax When Selling Property In Pennsylvania

No matter where you sell your house in America, there is no escaping federal capital gains tax.

And for residents of Philadelphia, PA, it’s no different.

There are two discrete applications for federal capital gains tax and only one of them can apply to your selling situation.

  1. If you have owned your home for less than one year, then short-term capital gains tax will apply.
  2. If you have owners your home for greater than one year, then long-term capital gains tax will apply.

Short-term capital gains are taxed as ordinary income and result in higher taxes than long-term capital gains.

If your selling situation is going to trigger an ordinary income tax from the IRS (i.e., a short-term capital gains tax), then you can easily look up the IRS’s tax tables in a given year to see what rates are going to apply. 

They do change annually, but we have found that NerdWallet does a fantastic job on continuing to update the rate schedule.

taxes when selling a house

For homeowners with long-term capital gains tax implications, it gets slightly more complicated.

Here’s how to break it down:

  • You can pay 0% if the following criteria is met:
    • You file “Single” or “Married Filing Separately” and the taxable income is $41,675 or less.
    • You file “Married Filing Jointly” or “Qualifying Surviving Spouse” and the taxable income is less than $83,350.
    • You file “Head of Household” and the taxable income is $55,800 or less.
how much tax will i pay when selling my home
  • Unfortunately, you’re on the hook for 15% tax if:
    • You file “Single” and the taxable income is between $41,675 and $459,750.
    • You file “Married Filing Jointly” or “Qualifying Surviving Spouse” and the taxable income is between $83,350 and $517,200.
    • You file “Married Filing Separately” and the taxable income is between $41,675 and $258,600.
    • You file “Head of Household” and the taxable income is between $55,800 and $488,500.
how much tax will i pay when selling my house

Bear in mind, the above “taxable income” amounts are not just those generated from the sale of your property but also of any other personal or business income that gets reported annually.

Many homeowners may qualify for complete exemption of capital gains tax if the house was used as their primary residence for at least 2 out of the last 5 years before they sold the property.  Limits apply.

Federal capital gains tax is usually the largest amount of dollars coming out of your pocket at closing.  Now that we’ve gotten that one out of the way, let’s move to Pennsylvania State Capital Gains Tax.

State Capital Gains Tax When Selling Property In Pennsylvania

State capital gains tax in Pennsylvania is much simpler than the federal rate schedule.

In the Keystone state, your capital gains are treated as personal income.

For example:

If you sold a house that generated a non-exempt taxable gain of $50,000.  And if in that same year, you also earned $100,000 from your W2 salaried job.  Then you would have a total taxable income of $150,000.

And in that case, Pennsylvania slaps a 3.07% flat tax on all income.  There are no tax brackets or progressive income schedules to compute.  All income is taxed at 3.07%.

Concluding the above example, total PA State Income Tax due would be $4,605 (including state capital gains tax).

That about sums it up for all PA state capital gains and income tax that could be generated from the sale of your home in Pennsylvania. 

What’s left is any transfer tax that the state and local jurisdiction (i.e., city) might levy on your transaction.

Transfer Tax In Pennsylvania

Transfer tax or Realty Transfer Tax (RTT) is a fixed percentage amount levied on the sale price of your home in Pennsylvania.

There are two applications of Realty Transfer Tax in Pennsylvania:

  1. State applied RTT
  2. Locally applied RTT

From our above assumption, we will continue using Philadelphia, PA as our location and from there illustrate what amount could be owed when selling your home.

Although each city and county in Pennsylvania is a little bit different than the other, it’s always best to look up your property’s location to be as accurate as possible.

We update the transfer tax by county in Pennsylvania table each year so you can be fairly confident that these numbers will work for your estimates.

Let’s walk through how each of these transfer taxes work.

State Transfer Tax When Selling Property In Pennsylvania

State transfer tax in PA is computed as 1% of the property’s value. 

That’s the bad news.

The good news is that this amount is customarily split between buyers and sellers in Pennsylvania.

are there taxes when I sell my house

For example:

If Paul sells his home in Philadelphia, PA for $300,000, then he can expect to pay $3,000 in total state transfer tax.  Under a traditional sale, this amount would be split 50-50 between the buyer and seller.  Paul will owe $1,500 in Pennsylvania Transfer Tax and his buyer would cover the remaining $1,500. That is, of course, as long as the buyer agrees to.

Local Transfer Tax When Selling Property In Pennsylvania

Local transfer tax is an additional tax levied by county and/or township in Pennsylvania. 

It’s not a substitute for PA State Transfer Tax, but an incremental amount.

Therefore, in addition to the 1% that the state collects, you can add on top of that another percentage based on your county and township. 

For Philadelphia, the local transfer tax rate is 3.27%.  It’s among one of the highest in country.

Why, you may ask?

Transfer taxes are important to help fund local amenities, school systems and public works.  Some counties across the US charge more and some less, but you typically get what you pay for.

More taxes, in general, should mean safer and higher quality of life.  For some residents of Philadelphia’s most dangerous neighborhoods, it doesn’t always feel that way.

If Philadelphia is not your location and you’re selling a home in another county or township, then you’ll want to look up your details in this table below.

Transfer Tax By County In Pennsylvania

LocationCounty & TownshipPA StateTotal
Adams County1.00%1.00%2.00%
Allegheny County1.00%1.00%2.00%
Bellevue Borough1.50%1.00%2.50%
Bethel Park Municipality1.50%1.00%2.50%
Greentree Borough1.50%1.00%2.50%
Hampton Township1.50%1.00%2.50%
McCandles Township1.50%1.00%2.50%
City of McKeesport2.00%1.00%3.00%
Monroeville Municipality1.50%1.00%2.50%
Mt. Lebanon Municipality1.50%1.00%2.50%
Mt. Oliver Borough2.00%1.00%3.00%
O’Hara Township1.50%1.00%2.50%
Penn Hills Municipality2.00%1.00%3.00%
Pine Township1.50%1.00%2.50%
City of Pittsburgh4.00%1.00%5.00%
Upper St. Clair Township1.50%1.00%2.50%
West Deer Township1.50%1.00%2.50%
Whitehall Borough1.25%1.00%2.25%
Armstrong County1.00%1.00%2.00%
Beaver County1.00%1.00%2.00%
Bedford County1.00%1.00%2.00%
Berks County1.00%1.00%2.00%
City of Reading4.00%1.00%5.00%
Blair County1.00%1.00%2.00%
Bradford County1.00%1.00%2.00%
Bucks County1.00%1.00%2.00%
Butler County1.00%1.00%2.00%
Cambria County1.00%1.00%2.00%
Cameron County1.00%1.00%2.00%
Carbon County1.00%1.00%2.00%
Centre County1.00%1.00%2.00%
Ferguson Township1.75%1.00%2.75%
State College Borough2.00%1.00%3.00%
Taylor Township0.50%1.00%1.50%
Chester County1.00%1.00%2.00%
City of Coatesville2.00%1.00%3.00%
Tredyffrin Township1.50%1.00%2.50%
Clarion County1.00%1.00%2.00%
Clearfield County1.00%1.00%2.00%
Clinton County1.00%1.00%2.00%
Colebrook Township0.50%1.00%1.50%
East Kating Township0.50%1.00%1.50%
Columbia County1.00%1.00%2.00%
Crawford County1.00%1.00%2.00%
Borough Of Edinboro1.50%1.00%2.50%
Cumberland County1.00%1.00%2.00%
Dauphin County1.00%1.00%2.00%
Delaware County1.00%1.00%2.00%
Radnor Township1.50%1.00%2.50%
Upper Providence Township2.00%1.00%3.00%
Elk County1.00%1.00%2.00%
Erie County1.00%1.00%2.00%
Fayette County1.00%1.00%2.00%
Forest County1.00%1.00%2.00%
Franklin County1.00%1.00%2.00%
Fulton County1.00%1.00%2.00%
Greene County1.00%1.00%2.00%
Huntingdon County1.00%1.00%2.00%
Indiana County1.00%1.00%2.00%
Jefferson County1.00%1.00%2.00%
Juniata County1.00%1.00%2.00%
Lackawanna County1.00%1.00%2.00%
City of Scranton3.30%1.00%4.30%
Lancaster County1.00%1.00%2.00%
Lawrence County1.00%1.00%2.00%
Lebanon County1.00%1.00%2.00%
Lehigh County1.00%1.00%2.00%
Luzerne County1.00%1.00%2.00%
City of Pittson2.25%1.00%3.25%
City of Wilkes Barre2.50%1.00%3.50%
Kingston Borough1.50%1.00%2.50%
City of Hazleton1.50%1.00%2.50%
Lycoming County1.00%1.00%2.00%
Mckean County1.00%1.00%2.00%
Mercer County1.00%1.00%2.00%
City of Farrell2.00%1.00%3.00%
City of Hermitage2.00%1.00%3.00%
City of Sharon1.50%1.00%2.50%
City of Sheakleyville Boro0.00%1.00%1.00%
Mifflin County1.00%1.00%2.00%
Monroe County1.00%1.00%2.00%
Montgomery County1.00%1.00%2.00%
Montour County1.00%1.00%2.00%
Northampton County1.00%1.00%2.00%
Northumberland County1.00%1.00%2.00%
Perry County1.00%1.00%2.00%
Philadelphia County3.28%1.00%4.28%
Pike County1.00%1.00%2.00%
Potter County1.00%1.00%2.00%
Schuylkill County1.00%1.00%2.00%
Snyder County1.00%1.00%2.00%
Somerset County1.00%1.00%2.00%
Wellersburg Borough0.50%1.00%1.50%
Sullivan County1.00%1.00%2.00%
Susquehanna County1.00%1.00%2.00%
Tioga County1.00%1.00%2.00%
Union County1.00%1.00%2.00%
Venango County1.00%1.00%2.00%
Warren County1.00%1.00%2.00%
Washington County1.00%1.00%2.00%
Peters Township1.50%1.00%2.50%
Wayne County1.00%1.00%2.00%
Westmoreland County1.00%1.00%2.00%
Wyoming County1.00%1.00%2.00%
York County1.00%1.00%2.00%

Do You Need To Sell Your House Without Taxes?

For many homeowners, especially those living in area with high transfer tax rates (Pittsburgh, Philadelphia, etc.), it may make sense to have a professional home buyer cover those costs when selling your home.

Home buyers, such as Signature Properties, pay for all of the closing costs and transfer taxes when they buy your home.

For properties that are subject to the taxes, it can make a meaningful difference for the seller and keep more of their net proceeds at closing.

If you’re trying to estimate how much profit you will keep after selling your house and transfer taxes are eating away at that number, then give us a call or reach out through this form for a free no obligations cash offer:

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Author: Doug Greene

Doug Greene is no stranger to all topics real estate and business. For over a decade he has been educating others and helping homeowners navigate difficult, complex problems with their property.

His work has been featured in the NY Times, Washington Post, Realtor.com, Apartment Therapy, HomeLight, Homes & Gardens and many more.