Effective July 1, 2025, the realty transfer tax rate for properties or acquired real estate companies sold in the City and County of Philadelphia will increase to 3.578%, in addition to the Commonwealth of Pennsylvania realty transfer tax rate of 1%, bringing the total tax rate to 4.578%. This represents a 0.3% increase over the current transfer tax rate. The realty transfer tax applies to the sale of both residential and commercial properties, with limited exemptions and will impact homebuyers as well as developers and investors across the City of Philadelphia.
What You Need to Know:
- Effective July 1, 2025, the realty transfer tax rate for properties bought and sold in Philadelphia will increase to 4.578%.
- New revenues from the higher transfer tax rate are intended to fund Mayor Parker’s HOME initiatives for new and refurbished housing.
- City Council also exempted certain affordable housing projects from the City’s relatively new development impact tax.
This relatively sudden change was the result of budget negotiations between Philadelphia’s City Council and Mayor Cherelle L. Parker and relate to proposed spending by the current mayoral administration in support of her Housing Opportunities Made Easy (HOME) initiatives to increase the affordability and availability of local housing stock. The enacting legislation, Bill No. 250211, passed on June 12, 2025, as part of the proposed Fiscal Year 2026 budget package. Accompanying this legislation and passing alongside it was a proposed ordinance to exempt certain affordable housing residential construction projects from the development impact tax equal to 1% of the anticipated construction costs of the project, although the first iteration of the development tax impact bill would have repealed the development impact tax entirely for new projects permitted after July 1, 2025.
The local realty transfer tax rate was set to decrease to 3.178% for transactions closing on and after January 1, 2037, however this scheduled decrease was rescinded in the enacting legislation for the new July 1, 2025, tax rate increase, and the Philadelphia realty transfer tax rate will be 3.578% for the foreseeable future.
Prior to the enactment of this legislation, Philadelphia imposed one of the highest realty transfer tax rates in the Commonwealth of Pennsylvania, though even with this latest increase, Philadelphia’s high transfer tax rate is still lower than in the City of Pittsburgh in Allegheny County and the City of Reading in Berks County, each of which have a realty transfer tax rate of 5% (4% local, 1% state).
Additionally, the Commissioner of Records announced a $3 increase in recording fees for deeds, mortgages, assignments, and mortgage satisfactions and releases, effective July 1, 2025. More information about the increased recording fees can be found on the Department of Records website here: https://www.phila.gov/2025-06-16-important-changes-to-recording-fees-and-transfer-tax-starting-july-1-2025/.
