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Council committee advances bill to exempt inherited primary residences from transfer tax when mortgages exist
Summary
Council heard testimony and personal testimony in support of bill 260021, which would exempt the value of outstanding mortgage balances from being treated as "actual consideration" for Philadelphia’s realty transfer tax when a primary residence passes to an heir; advocates said the change will reduce tangled‑title barriers that disproportionately affect Black neighborhoods and older homeowners.
The Committee on Finance heard extensive testimony in favor of bill 260021, which would amend the Philadelphia Code to prevent outstanding mortgage balances or other liens from being treated as "actual consideration" that can trigger the city’s realty transfer tax when a primary residence passes to an heir.
James Leonard, Commissioner of the Department of Records, said the change codifies a long‑standing practice that helps untangle titles and prevents heirs from facing large transfer tax bills at a time they are trying to record deeds. Leonard said Philadelphia has an estimated 10,000 tangled titles representing about $1.1 billion in value and that the burden falls heaviest on communities that are about 80–87% Black.
Rachel Gyos (Community Legal Services) and Kevin Boswell (Senior Law Center) provided client‑level data and case examples showing how the existing approach can force heirs to pay transfer taxes on mortgage balances before they obtain recorded title, a process that can block loan modifications and lead to foreclosure. CLS said the Tangled Title Fund has expended funds to pay transfer taxes that advocates contend should be exempt. Michelle Waller, a resident, described her personal experience inheriting her mother’s home, probate challenges, and difficulty communicating with the mortgage company; she said CLS helped her probate the estate and secure the deed.
Advocates including PACDC said exempting mortgage balances from consideration would lower up‑front costs for heirs, speed title resolution, and help preserve generational wealth. Committee members expressed support and indicated a follow‑up bill may be needed to address related DHS claim interactions and other code clarifications.
The committee voted by voice to report bill 260021 with a favorable recommendation and requested suspension of rules to permit its first reading. The transcript records voice votes and supportive testimony from multiple nonprofit legal services and a resident; it does not include a roll‑call tally of individual member votes.
