Yes, you can buy a house in a trust in Pennsylvania. Most buyers who do it use a revocable living trust, so the home is already titled the way their estate plan intends, and lenders accept these trusts when a few conditions are met. Buying in an irrevocable trust is also possible, usually with cash, and serves different goals.
Below: how a trust purchase works, how financing and title insurance handle it, the Pennsylvania homestead exclusion, and what a trust can and cannot do for your family.
Why buy in a trust
- Probate. A home owned by a living trust can pass to your heirs without going through probate, which keeps the transfer private and often faster.
- Incapacity planning. A successor trustee can manage or sell the home if you cannot.
- Consistency. If your other assets are already in a trust, titling the home there at purchase saves a separate deed later.
What a trust does not do on its own: it does not remove Pennsylvania inheritance tax, and a revocable trust does not protect the home from your own creditors.
Revocable versus irrevocable
| Revocable living trust | Irrevocable trust | |
|---|---|---|
| Who controls it | You, as creator and usually trustee | A trustee, under fixed terms |
| Mortgage financing | Widely available | Rarely available; usually a cash purchase |
| Taxes | Treated as yours for income tax | Depends on how the trust is drafted |
| Main purpose | Avoiding probate, incapacity planning | Long-term estate, creditor, or family planning |
The rest of this guide focuses on revocable living trusts, since that is what most buyers use.
Getting a mortgage in a living trust
Fannie Mae, whose rules most conventional lenders follow, allows a revocable living trust to borrow when:
- The trust was created by one or more individuals during their lifetime and can be changed or revoked.
- The creators are the trust’s primary beneficiaries, and at least one creator is a borrower.
- A creator, or an institutional trustee, is a trustee with the power to mortgage the property.
- For a primary residence, at least one creator lives in the home and signs the loan documents.
The trustees sign the note and mortgage for the trust, and a creator who is also a borrower signs both individually and as trustee. Jumbo lenders write their own rules; some prefer to close in your individual name and have you deed the home to the trust afterward. Federal law generally lets you move your home into a living trust you benefit from and live in without triggering the loan’s due-on-sale clause, but confirm with your lender and attorney first.
Title insurance and the deed
The deed names the trustees, for example “Jane Smith, Trustee of the Jane Smith Revocable Trust.” Your title insurance policy must show title vested in the trustees, and the title company will usually ask for a trust certification or relevant pages of the trust. Plan for this before settlement so the documents are ready.
Pennsylvania’s realty transfer tax still applies to your purchase itself. A later transfer of a home you already own into your own living trust is generally excluded from the tax.
The Pennsylvania homestead exclusion
The homestead exclusion lowers school property taxes on a primary residence. Pennsylvania’s definition of an owner for this purpose includes a person who has placed the home in a revocable trust, so a home in your living trust that you live in should still qualify.
In Montgomery County, the application asks for an owner who lives in the home, and the deadline for school tax relief is March 1. Call the county’s Board of Assessment Appeals before you file to confirm what documents they want for a trust-owned home. Homes owned by irrevocable trusts are less clear-cut, so ask your attorney.
Selling later
A home in your revocable living trust is generally treated as yours for federal income tax, so you can still use the $250,000 / $500,000 home sale exclusion when you sell, provided you meet the ownership and use tests. The guide to selling a house held in a trust in Pennsylvania walks through the sale side.
Before you buy, ask your attorney
- Should this home be titled in our existing trust at settlement, or deeded in later?
- Will our lender accept the trust as a borrower, and what documents will the title company need?
- How will this purchase fit our larger estate plan, including inheritance tax and our children’s interests?
Working with Karen
Karen Langsfeld is a REALTOR® and Pricing Strategy Advisor (P.S.A.) with Berkshire Hathaway HomeServices Fox & Roach. On a trust purchase, she makes sure the agreement of sale names the right buyer, and she gives the estate attorney, lender, and title company the deadlines they need so the deed and loan are ready at settlement. For families helping children buy, see the guides to trust loans and helping your children buy a home, or learn more about helping your family buy or sell a home.
Contact Karen at (215) 495-2914 or through the contact page.
This guide is general information, not legal, tax, or lending advice. Confirm your plan with your estate attorney, lender, and title company. Sources: Fannie Mae Selling Guide B2-2-05; 53 Pa.C.S. section 8401; Montgomery County homestead application; Pennsylvania Department of Revenue.