Transfer taxes on contract assignments?

[Jerry Kisasonak]

I recently had someone tell me that you have to pay transfer taxes when you assign a contract. Is this true?

I've done contract assignments and have never paid any transfer tax. In my mind, there is no transfer of ownership only transfer of interest so there should be no transfer tax. Of course, upon closing the seller and the end buyer would have to pay the tax in accordance with how the payment of transfer tax is stipulated in the agreement - the agreement that was assigned.

I'm putting this out to my trusty BiggerPockets folks to set things straight. Thanks and advance... You guys (and the BP website) are wonderful!

[Steve Babiak]

Two links below cover transfer taxes. The short answer is yes, and that is covered in the second link (section 91.170).

http://www.pabulletin.com/secure/data/vol37/37-50/2306.html

http://www.pabulletin.com/secure/data/vol37/37-50/2306a.html

Some say that in light of that, two separate closings makes more sense. But lots of title companies don't seem to enforce that rule ...

EDIT: the above is specific to Pennsylvania.