When there is a transfer of a residence or other real estate with a retained life estate (which is usually not recommended, because it does not avoid any inheritance tax and can restrict the ability of the transferor to sell the property during his or her lifetime), the retained life estate is not subject to tax but the remainder interest may be taxable if the transfer is not to a spouse, child, or other family member to whom transfers are exempt. See Example 3 of 61 Pa. Code § 91.165 and 61 Pa.Code § 91.193(b)(6).
When the remainder is taxable, the taxable value is usually determined by multiplying the value of the entire property by an actuarial factor, based on a current interest rate and the age of the life tenant. When a remainder is retained and a life estate is transferred that is taxable, the value of the life estate is determined by multiplying the value of the property by a life estate factor.
The Pa. Department of Revenue is required to periodically publish notice of the life estate and remainder factors to be used in valuing life estates and remainders for realty transfer tax purposes, using the table of factors published by the Internal Revenue Service for an interest rate that is the average of the rates published by the IRS for the previous 36 months.
The following chart summarizes the interest rates and mortality tables that have been published since 2019, with citations (and links) to the tables of factors that have been published in the Pa. Bulletin.
| Effective Date | Interest Rate | Mortality Table | Pa. Bulletin |
|---|---|---|---|
| 7/1/2019 | 2.6% | 2000CM | 49 Pa.B. 3023 |
| 7/1/2022 | 1.4% | 2000CM | 52 Pa.B. 5877 |
| 7/1/2023 | 4.8% | 2010CM | 55 Pa.B. 4467 (6/28/2025) |
[Note on Revisions: An earlier version of this article was originally published on 2/7/2020, but it was rewritten on 6/27/2025 to present a summary of both new and past tables of factors in the form of a chart.]
