Just a reminder for those representing sellers of properties listed over $1,000,000, there was a change to Department of Revenue requirements that began November 1, 2025. All sales over one million dollars now require a completed Transferor’s Certification. so there is clarification for the closing attorney on the proper handling of tax issues.  Additionally, the closing attorney must collect and remit the tax amount due to the state if the seller is not a full-time resident, within 10 days of the closing (See DOR Overview and FAQs for exceptions).

There are no new taxes or increases to any taxes in the regulations. Residents will continue to pay taxes as part of their annual returns, but for some out of state sellers, tax on the gain from the sale will be paid at closing instead.

While the responsibility of compliance falls to the closing attorney, REALTORS® should be aware of this change to direct their clients for more information.  This change was made quickly and without allowing closing attorneys the time needed to create the required process and forms for compliance. The Real Estate Bar Association is working on developing best practice support for the closing attorneys who are suddenly responsible for implementation.

The purpose of the regulations is to establish and explain the withholding requirements that apply to the proceeds of sales or transfers of Massachusetts real estate from non-residents and to facilitate the collection of personal income tax or corporate excise tax on behalf of those who make the transfer.

MAR provided the following guidance to help REALTORS understand some basics, but it is important you direct your client to their attorney and accountant for this matter. Your role is simply to make them aware of what to expect in the transaction process.

Q: If my seller client is a full-time resident of Massachusetts, do they still have to complete the Transferor’s Certification form?

A: Yes, for every sale or exchange of Massachusetts real estate when the gross sales price is $1,000,000 or more, each seller must complete a Transferor’s Certification (PDF) and give it to the withholding agent on or before closing. The withholding agent will use this information to file a return. This form and the return must be completed even if no amount of withholding is collected. The certification must be completed even if the seller is a full-time resident of Massachusetts. Full-time residents will be able to indicate on the form that they are exempt from withholding, and no withholding will be required.

Q. How is a Massachusetts Full-Time Resident Defined?  

A full-year Massachusetts resident is exempt from this withholding. For the purpose of the regulation, a person is a full-year Massachusetts resident if they:

1. 1. Have been a resident, as defined in M.G.L. c. 62, § 1(f) (a person who is domiciled in MA or spends more than 183 days in taxable year with a permanent residence in MA), from January 1 of the year in which the Real Estate Transfer occurs through the Closing, and

1. 1. Represent that they will continue to be a resident, as defined in M.G.L. c. 62, § 1(f), after Closing.

Q. How much is the withholding?

Unless the seller chooses to use an alternative withholding calculation, the amount required to be withheld shall equal the seller’s share of the Gross Sales Price multiplied by 4%. If the seller’s capital gains are over $1 million dollars, then they will be subject to an additional 4% withholding to cover the millionaire’s tax.

Q. What about 1031 Exchanges? 

Withholding is generally not required for sales that qualify under the provisions of Code § 1031 on the amount of any gain that is deferred for Massachusetts tax purposes. To avoid withholding on any gain that is deferred, the seller must provide the closing attorney with a statement on the Transferor’s Certification acknowledging the amount of gain that has been deferred and consenting to personal jurisdiction in Massachusetts for tax purposes when gain is realized.

Q. I am the Escrow Agent, does this mean I am the Withholding Agent? 

No. The withholding agent is the person who is responsible for closing a real estate transaction. In most cases this is the closing attorney.

If, however, you have a non-resident seller transferring a property in Massachusetts with a gross sale over $1 million dollars, in which this regulation would apply, consult with the closing attorney as to how to handle any excess deposit/seller proceeds at the time of closing.

Read more here:  DOR Overview and FAQs