Deed Transfer Tax Boost Gets Preliminary Nod

Deed Transfer Tax Boost Gets Preliminary Nod

What seemed dead in the dog days of summer, the proposal to raise the City of Pittsburgh’s portion of the deed/realty transfer tax from 2% to 3% (the state levies a 1% tax, as does the Pittsburgh Public Schools, see this blog for more details) could become reality.   Based on a news article the increase would be phased in over three years, with the rate rising 0.5 point in 2018 and staying there in 2019 before going to 1 point in 2020, bringing the total deed transfer tax paid in the City to 5% (3 points City, 1 point Pittsburgh Public Schools, 1 point state).

The proposed increase came out of the Affordable Housing Task Force, which raised several possibilities for funding the goal of affordable housing, though the Task Force did recommend putting whatever tax that would be slated for an increase on the ballot.

Revenue from the tax is projected to bring in $24 million in 2018 at the 2% rate.  The last increase in the tax came in 2004.

But wait, City Council also has another aspect of the plan.  While it raises the tax, Council would direct the Urban Redevelopment Authority to create or restructure a program providing grants for closing costs for first time City buyers.  If the grant program were to come to fruition, the proposal would stipulate three conditions:

a) Must not have previously purchased a residential property in the City of Pittsburgh;
b) The applicable residential property must be owner-occupied for at least three (3) years following the closing date; and
c) The property must be sold at or below the average sale price in Pittsburgh. Average sale price shall be based on the average single-family home sale price within the City of Pittsburgh over the previous three (3) years.

This does not do much to alter the impact of the deed transfer tax, or its hike, on other buyers or sellers outside of the terms of the grant proposal idea (the transfer tax is typically split between the buyer and seller, would disqualify non-first time buyers such as people who might be moving from one house in the City to another, and would not apply to non-residential transactions).

To see a list of realty transfer tax rates in Allegheny County, follow this link.