The Pennsylvania Department of Revenue (“Department”) issued Realty Transfer Tax Bulletin 2022-01 on December 5, 2022. The Bulletin addresses issues of tax payment and refund procedures for realty transfer tax (“RTT”). RTT applies to the transfer of real estate unless an exemption applies. The tax generally consists of state (1%) and local (1%) components for a total tax of two percent.
The Bulletin covers refund scenarios when the RTT is paid to the local Recorder of Deeds (“Recorder”) as well as when it is paid to the Department. How the RTT is paid determines the course of action when a refund is requested.
When RTT is paid to the Recorder of Deeds, the local RTT refund must be requested from the Recorder, but the state portion is requested from the Department. When RTT is paid to the Department (usually as the result of an assessment), the refund must be requested from the Department. The taxpayer is responsible for notifying the Recorder of the Department’s refund determination to obtain the local portion of the refund.
RTT refunds can be obtained by either application or petition for refund. The application for refund typically applies to clerical or administrative issues such as calculation errors or duplicate payments. A petition for refund is the statutory method to obtain a tax refund. A petition for refund should be utilized when maintaining the rights to appeal is necessary (for example, statute of limitations).
RTT is commonly paid by both parties to a real estate transaction which can complicate the refund process. The bulletin addresses several scenarios and provides guidance for all parties on how to proceed with their individual refund claims.
The full Realty Transfer Tax Bulletin can be reviewed on the Department’s website.
If you have questions on the Realty Transfer Tax Bulletin or other SALT matters, please contact the HBK SALT Advisory Group at email@example.com.