Berman & Asbel, LLP

Diverse families in Philadelphia exempt from city real estate transfer tax

In a follow up on my earlier posting on how same-sex couples and other diverse families can plan to leave property to each other, there is an important benefit available to families living in Philadelphia.

The City of Philadelphia imposes a tax of 3 percent of the purchase price of real estate when sold.  The Commonwealth of Pennsylvania also imposes a real estate transfer tax - 1 percent of the sale price.

Transfers of real estate between spouses have long been exempt from real estate transfer taxes.  The City of Philadelphia enacted an ordinance exempting registered same-sex life partners from paying the city's real estate transfer tax when transferring property from one to the other.  That ordinance was struck down by Pennsylvania Supreme Court because it treated same-sex partners differently from other people such as unmarried heterosexual couples.  In 2007, Philadelphia responded by enacting a new ordinance which now exempts persons who live in a household together who are "financially interdependent" upon each other.  Read more about this ordinance and the court case that led to it in this article by Rebecca Schatschneider, Esq. in a Philadelphia Bar Association blog.  Registered Life Partners are covered by this ordinance but such registration is not required to benefit from it.

It should be noted that this ordinance has no effect on the statewide real estate transfer tax.

Readers should not solely rely on this note for planning but should consult with a competent attorney licensed in their state. You can also find more information in my firm's websites on Family Law and Wills and Estate Planning and Administration.

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