Philadelphia has specific rules and regulations that will influence your home purchase in the city. Read below to learn about real estate laws, taxes, conforming loan limits and other regulations you’ll encounter when buying and owning a home.
- Homebuyers are protected by Pennsylvania state law, in that sellers are required to complete a property disclosure form, issued by the Pennsylvania Real Estate Commission, about the condition of the home. Sellers must provide information about material defects or other factors that could have a noted effect on home values or resident safety. Information about roof issues, structural problems, pest problems and concerns with the home’s plumbing, electrical, sewage and water systems should be
- Pennsylvania is a judicial foreclosure state, meaning lenders are required to file a lawsuit and go to court if a homeowner defaults on the mortgage. Pennsylvania statutes give lenders the right to deficiency judgments, or the right to take a borrower to court to receive the balance of the loan if the foreclosed property sells for less than the initial mortgage. Homeowners in danger of foreclosure could be eligible for loan assistance from the Pennsylvania Housing Finance Agency’s Homeowners’ Emergency Mortgage Assistance Program (HEMAP), and state law requires that lenders issue a notice to delinquent homeowners about the program. This fact sheet offers more information. Philadelphia also offers an assistance program for city homeowners, and you can check within your county to see if you’re eligible for a diversion program if you own a home in the region.
- If you’re considering or going through a divorce, be aware that Pennsylvania is an equitable distribution state, which means spouses can determine how they want to divide their property; and if they can’t agree, a court will decide for them. Unlike the 50/50 split in community property states, courts in Pennsylvania will work to divide assets by considering multiple factors, such as the length of the marriage and differences in spousal income and assets. Also important to note: In equitable distribution states, spousal debt inclusion is not required for VA, FHA and USDA loan approval.
- Closings in Philadelphia may be handled by either a licensed attorney or title company.
A transfer tax results from any transference of ownership of property, and lenders must disclose the tax amount that will be the responsibility of the buyer and seller once a specific property is identified. Pennsylvania transfer taxes are 1% of the value of the real estate, and some counties levy an additional amount to benefit schools and meet other local needs. Philadelphia, for example, issues a 3.278% realty transfer tax, meaning that city residents can expect to pay a total of 4.278% in transfer taxes when buying and selling a home.
The median annual property tax bill in Pennsylvania is $2,223 per year, based on a tax rate of 1.35%, according to Tax-Rates.org. That places the state 16th among the 50 states in average property taxes collected. Larger areas often have higher tax rates, and the Philadelphia region is no exception. Chester County, located just outside Philadelphia, has the highest property tax average in the state, at $4,192 annually. Bucks County is $4,090, Delaware County is $3,877 and Montgomery County is $3,834. If you own a home in Philadelphia County, however, you’re in luck. Tax rates are lower than the state median, coming in at $1,236 annually.
If these rates are unaffordable for you, Pennsylvania offers property tax reductions for certain populations. Eligible low-income state residents over 65, widows and widowers over 50 and disabled people over 18 qualify if their income is no more than $35,000 per year, allowing them to receive a maximum standard rebate of $650. Supplemental rebates can boost that total to $975. In addition, disabled veterans can receive a property tax exemption that reduces the taxable value of their homes, resulting in lower tax payments.
Conforming loan limits
Most counties in Pennsylvania, including those that make up the greater Philadelphia area, have a maximum conforming loan limit of $484,350 for single-family homes.
Conforming loan limits set the maximum amounts borrowers can take on for loans backed by government-sponsored entities Fannie Mae and Freddie Mac. The limits are set each year by the Federal Housing Finance Agency.