Heads up, Massachusetts real estate sellers!
The Massachusetts Department of Revenue (DOR) has rolled out a new withholding procedure that impacts sellers of higher-value properties. This isn’t a new tax, but an administrative collection practice designed to ensure the Commonwealth collects income or corporate taxes already due from non-resident sellers.

Here’s an informative breakdown of what you need to know about this new requirement.

Who Is Affected by the Withholding?

The withholding requirement only applies to transactions that meet both of these criteria:

1. The property’s gross closing price is above $1,000,000

2. The seller lives out of state or plans to move out of state

In short, if you are a non-resident selling a Massachusetts property for a million dollars or more, you will be subject to a tax withholding from your sale proceeds at closing.

The Key Document: The Transferor’s Certification

Whether or not you are a non-resident, all sellers of properties grossing over $1,000,000 must complete a Transferor’s Certification.

• This document is crucial because it signals to the withholding agent (usually the closing attorney) how much, and if, they should withhold from the transaction.

• If you are an exempt seller, this form is how you officially claim that exemption.

Am I Exempt from Withholding?

If your property’s gross closing price is over $1,000,000, you may be exempt from the actual withholding if you fall into one of the following categories and complete the Transferor’s Certification:

• Full-year Massachusetts residents

• Pass-through entities

• Publicly traded partnerships

• Estates of resident decedents

• Resident trusts

• Corporations with a continuing Massachusetts business presence

• Organizations qualified under Internal Revenue Code §501(c)(3), unless the sale results in unrelated business taxable income

• Insurance companies

• The U.S. government, the Commonwealth of Massachusetts, or any political subdivision or agency thereof

• Certain financial institutions, mortgage associations, and real estate investment trusts

What This Means for You as a Seller

This is an administrative change that requires early attention and planning.

• Complete the Transferor’s Certification. Even if you’re a full-year resident, your closing is not complete without this form for sales over $1,000,000.

• Consult your professionals early. If you’re subject to withholding, it’s essential to talk to your tax and legal counsel about your specific circumstances. They can guide you on completing the Transferor’s Certification and discuss the potential impact on your proceeds at closing.

• Your REALTOR® will advise you. Your real estate agent’s role is to ensure you’re aware of this new requirement right from the listing appointment.

The Bottom Line

All sellers of properties over $1,000,000 must now complete this additional piece of documentation. If you’re a non-resident seller, this could be a significant cash-flow consideration — one that requires professional advice and careful planning before closing.