Renting Out Your Pennsylvania Home Instead of Selling It
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
In Pennsylvania this structure removes an entire taxable transfer. That is a clearer, more countable advantage than the usual arguments for keeping a house.
What it removes
Pennsylvania realty transfer tax attaches to the transfer of real estate: 1 percent at state level on the value transferred, often with an additional local realty transfer tax collected at the same time by the county Recorder of Deeds.
A buy-before-you-sell that ends in a sale records two deeds and therefore produces two taxable transfers. Keeping the departing home records one, the purchase.
Because the tax scales with the value of the property transferred, this is worth most where the departing home is the more valuable of the two, which is common in a downsizing or a lateral move. See the transfer tax page.
What it costs
The proceeds. No sale means nothing to retire a bridge loan with, nothing to pay off a second mortgage, and nothing to apply as a principal reduction on a recast.
The file has to work on income and reserves alone, with the departing home's payment either offset by rent or carried outright. Removing a transfer tax event does not compensate for a structure that does not qualify.
One question to put to your attorney
The Department's own description of the tax reaches real estate transferred by deed, instrument, long-term lease or other writing.
Long-term lease is a defined category in the tax law and an ordinary residential tenancy is a different thing. We are not going to state a threshold, because we have not verified one. If the arrangement you are contemplating is anything other than a conventional residential tenancy, ask your attorney whether the lease itself falls into that category. Better asked before signing.
And the lease will not help your loan either
Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08, ends its documentation section with a flat statement: lease agreements are not permitted for any departing residence.
Acceptable evidence of monthly gross rent is a complete appraisal report that includes market rents; a Single-Family Comparable Rent Schedule, Form 1007, for the occupied unit; or market analysis tools such as Zillow, Redfin or the MLS using at least three comparable rental properties from the same market area, including subdivision or project where possible. The lender must also document a current housing payment first.
What the income is worth
Adjusted net rental income is monthly gross rent times 75%, then minus the departing residence's PITIA. Positive, and it offsets that property's PITIA and stops there. Negative, and the shortfall is added to your debt-to-income ratio.
The best available outcome is that the old house stops counting against you.
Reserves and the 12-month line
B3-3.8-05 requires six months of reserves covering the vacated property's PITIA when the borrower has less than 12 months of property management experience, in addition to reserves required for multiple financed properties.
If the departing home has more than one unit
The lender obtains the most recent year of individual federal income tax returns, IRS Form 1040, to support rental income received for tenant-occupied units. Those units follow the non-subject-property guidance, and the vacancy factor applies only to the unit the borrower occupied.
Compare the routes on the structures page, or start from the Pennsylvania guide.
Frequently asked questions
Does renting out my Pennsylvania home avoid a transfer tax?
It avoids one of them. Realty transfer tax attaches to each transfer of real estate, and keeping the departing home records only the purchase deed, so one taxable transfer instead of the two a buy-and-then-sell produces.
When is that saving worth the most?
Where the departing home is the more valuable of the two properties, because the tax is charged on the value of the real estate transferred. That is common in a downsizing or a lateral move.
Could a lease itself be a taxable transfer in Pennsylvania?
The Department's wording reaches real estate transferred by long-term lease, a defined category rather than an ordinary residential tenancy. We do not state a threshold because we have not verified one. If your arrangement is unusual, ask your attorney before signing.
Can I use a signed lease to document rent on the home I am leaving?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026, states that lease agreements are not permitted for any departing residence. Use a complete appraisal including market rents, a Form 1007 rent schedule, or market analysis tools with at least three comparable rentals.
How many months of reserves will a first-time landlord need in Pennsylvania?
Six months of reserves covering the vacated property's PITIA, because that applies when the borrower has less than 12 months of property management experience, in addition to any reserves required for multiple financed properties.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Pennsylvania realty transfer tax is collected by county Recorders of Deeds and local rates vary by municipality and school district; your closing agent, your CPA or a Pennsylvania attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.