Buying or selling a home in Lebanon County and not sure how Pennsylvania’s transfer tax works? You are not alone. This line item can surprise buyers and sellers if you do not plan for it. In this guide, you will learn what the tax is, who usually pays it, how it shows up on your closing statement, and how to estimate your share with simple examples. Let’s dive in.
What is the Pennsylvania transfer tax?
Pennsylvania charges a realty transfer tax when a deed changes hands. The statewide portion is 1.0% of the sale price. Local governments can add their own transfer tax, so the total rate is the state portion plus any county or municipal portion that applies where the property is located.
You typically pay this tax at recording. The title company or settlement agent prepares the required forms and pays the tax when the deed is recorded. If filings or payments are late, penalties and interest can apply.
Lebanon County local rates
Local transfer tax rates can vary by municipality in Lebanon County. The City of Lebanon, Annville, Palmyra, and other boroughs may have their own local transfer tax in addition to the state’s 1%. The exact local percentage can change.
Before you budget, confirm the current rate for the property’s municipality with your title company, the Lebanon County Recorder of Deeds, or the local municipal office. Many Pennsylvania transactions end up around a combined 2.0% total, but you should verify before you rely on a number.
Who usually pays the tax?
Your purchase agreement controls who pays. In many Pennsylvania markets, the buyer and seller split the combined transfer tax 50/50. Some sellers agree to pay all of it as part of negotiations, and in some cases the buyer pays all. The split is not automatic.
Even when the tax is split, the title company usually collects both portions at closing. The buyer’s share comes from buyer funds and the seller’s share comes from the seller’s proceeds, then the title company remits the total at recording.
How it appears on your closing statement
On the Closing Disclosure or HUD-1, you will typically see separate line items for each portion, such as:
- Realty Transfer Tax — State
- Realty Transfer Tax — County or Municipal
If you are financing, transfer taxes paid by the buyer appear in the “Other” or “Other Adjustments” sections as a settlement charge. The seller’s side will show the seller’s portion as a deduction from net proceeds. Both parties usually sign transfer tax affidavits or returns that confirm the sale price and any exemptions.
Estimating your cost
Use a simple formula: sale price × state rate (1.0%) + sale price × local rate = total transfer tax. Then apply the contract split to see your share.
Scenario 1: Combined 2.0% total (common example)
Assumes state 1.0% plus local 1.0%. Confirm your exact local rate for Lebanon County before budgeting.
- $200,000 × 2.0% = $4,000 total. If split 50/50, buyer = $2,000, seller = $2,000.
- $350,000 × 2.0% = $7,000 total. If split 50/50, buyer = $3,500, seller = $3,500.
- $500,000 × 2.0% = $10,000 total. If split 50/50, buyer = $5,000, seller = $5,000.
Scenario 2: Combined 1.5% total (lower local example)
Assumes state 1.0% plus local 0.5%. Again, verify your local percentage for the property’s municipality.
- $200,000 × 1.5% = $3,000 total. If split 50/50, buyer = $1,500, seller = $1,500.
- $350,000 × 1.5% = $5,250 total. If split 50/50, buyer = $2,625, seller = $2,625.
- $500,000 × 1.5% = $7,500 total. If split 50/50, buyer = $3,750, seller = $3,750.
Exemptions and special situations
Some transfers qualify for exemptions or special treatment under Pennsylvania rules. Examples include certain transfers between spouses, transfers incident to divorce, some transfers to government entities or recognized charities, and some intra-family transfers with no monetary consideration. Builder sales are generally taxable when the builder conveys title to the buyer.
If you plan to claim an exemption, you must file the correct paperwork at recording. The title company typically prepares the forms, and you will provide the information and signatures needed.
Refinancing a mortgage does not usually trigger transfer tax because no deed is conveyed. If a refinance includes a change in ownership, the tax treatment may be different.
Recording fees vs. transfer tax
It helps to separate these two. Recording fees are administrative charges by the Recorder of Deeds to file documents. These fees are fixed amounts, not a percentage of the sale price, and they are usually much smaller.
Transfer tax is a percentage of the price. It is separate from recording fees, and both will appear on your closing statement.
Practical checklist for buyers and sellers
Use this quick list to avoid surprises:
- Confirm the exact current local transfer tax rate for the property’s municipality in Lebanon County.
- Clarify in the contract who pays the tax. If it is not stated, ask the agents involved what the local custom is and what is being negotiated.
- Ask your title company:
- What will the transfer tax lines look like on the Closing Disclosure or HUD-1?
- Will you collect both buyer and seller portions and remit at recording?
- What affidavits or returns will we sign, and do we need any documents for exemptions?
- How will the buyer’s transfer tax affect cash to close?
- Are there municipal transfer taxes or special recording fees for the City of Lebanon, Annville, or Palmyra?
- Ask your lender if the buyer’s share of transfer tax is reflected in the Loan Estimate and Closing Disclosure.
- Sellers should request a net sheet that shows the transfer tax deduction from proceeds.
Common pitfalls to avoid
- Using an outdated local rate. Always verify the current municipality rate before budgeting.
- Assuming the seller always pays. The contract controls the split.
- Missing municipal taxes inside Lebanon County. City or borough levies can apply.
- Skipping required affidavits. Missing signatures can delay recording and add costs.
- Confusing transfer tax with property taxes, recording fees, or title insurance. Budget for each separately.
Plan your Lebanon County closing with confidence
Transfer tax is predictable when you confirm the local rate and lock in who pays what in your contract. Your title company will show the exact numbers on your closing statement and handle filing at recording. If you are weighing an offer strategy or budgeting for closing, a quick review of the combined rate and split can save you from last-minute stress.
If you want local guidance on the current municipality rate and a clear estimate of your closing costs, connect with Michael Orta. Our team helps buyers and sellers across Lebanon County plan smarter and close with confidence.
FAQs
What is the Pennsylvania transfer tax and how is it calculated?
- It is a tax on deed transfers calculated as 1.0% state plus any local county or municipal percentage, multiplied by the sale price.
Who usually pays the transfer tax in Lebanon County purchases?
- The purchase contract decides, and many deals split the total 50/50 between buyer and seller, but parties can negotiate a different split.
How do I find the current local transfer tax rate for my Lebanon property?
- Confirm with your title company, the Lebanon County Recorder of Deeds, or the property’s city or borough office since municipal rates can change.
Where will the transfer tax show on my Closing Disclosure or HUD-1?
- Expect separate lines for state and local portions, with the buyer’s charge in the “Other” section and the seller’s portion deducted from proceeds.
Are there exemptions to the transfer tax for family or nonprofit transfers in Pennsylvania?
- Certain transfers, such as between spouses, incident to divorce, or to recognized government or charitable entities, may qualify if proper documents are filed.
Do refinancing or mortgage changes trigger transfer tax in Lebanon County?
- A refinance alone does not usually trigger transfer tax because no deed is conveyed, but any change in title can affect tax treatment.
