Legislation that would make it easier for Philadelphians to inherit their family homes has been introduced in Philadelphia City Council.
Known as the Generational Wealth Preservation Bill, the measure would update the Philadelphia Code to clarify that heirs do not need to pay the Realty Transfer Tax (RTT) when inheriting a family home with an outstanding mortgage that cannot be paid off by the estate.
“This legislation is about fairness and stability for Philadelphia families when they need it most,” said Majority Leader Katherine Gilmore Richardson, who introduced the bill last …
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Legislation that would make it easier for Philadelphians to inherit their family homes has been introduced in Philadelphia City Council.
Known as the Generational Wealth Preservation Bill, the measure would update the Philadelphia Code to clarify that heirs do not need to pay the Realty Transfer Tax (RTT) when inheriting a family home with an outstanding mortgage that cannot be paid off by the estate.
“This legislation is about fairness and stability for Philadelphia families when they need it most,” said Majority Leader Katherine Gilmore Richardson, who introduced the bill last month. “The current system is inequitable — families should be able to pass down property without paying what can be a significant amount of money in transfer taxes. That money can mean the difference between keeping a home and losing it, between preserving a family legacy and being forced to give it up, creating yet another barrier to resolving tangled titles and building generational wealth.”
Currently, only transfers for “no or nominal actual consideration,” or homes that are paid off, are exempt from the RTT, which must be paid in full before a new deed can be recorded. When a home has an existing mortgage, the heir assumes the outstanding debt from the estate, meaning the transfer no longer qualifies as being “for no or nominal actual consideration.” As a result, heirs may be required to pay substantial transfer taxes, making it more difficult for families to pass a home from one generation to the next.
“This important piece of legislation will have an immediate impact on children and other heirs who inherit their family homes,” said Community Legal Services attorney Rachel Gallegos. “Currently, because of an unintended consequence of the law, heirs must pay a transfer tax on any outstanding mortgage related to the home. This law eliminates an unfair and expensive barrier to resolving tangled titles and allows more families to keep their home in the family.”
Gilmore Richardson also introduced a hearing resolution focused on addressing tangled titles. The goal of the hearing will be to gather updated information and assess progress since the last hearing on tangled titles held in 2021.
