Earlier this month, the Pennsylvania Department of Revenue released updated common level ratio factors to be used in calculating realty transfer tax for certain real estate transactions. For most counties, the new common level ratio factors are to be used for transactions occurring between July 1, 2013, and June 30, 2014. In Philadelphia, the new common level ratio factor of 1 is effective as of Jan. 1 due to the city’s reassessment of property values under the Actual Value Initiative. Prior to the latest revision, Philadelphia’s common level ratio factor was 3.46.

When Is The Common Level Ratio Used?

The Pennsylvania realty transfer tax is a tax imposed on the transfer of property. Pennsylvania imposes a 1 percent tax on a transfer of property while the local governing authority imposes an additional amount depending on the location of the property. The city of Philadelphia tacks on an additional 3 percent for transactions in Philadelphia, so a property transfer in Philadelphia incurs a 4 percent transfer tax liability. Certain transactions, like those between husband and wife, or certain transactions contemplated by a straw party agreement, are exempt from the transfer tax. As a matter of Pennsylvania practice, the transfer tax liability is generally split between the buyer and seller of the property.

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