If you’re selling a home for $1 million or more, it’s vital to be aware of the tax laws that will affect you.

Effective Nov. 1, 2025, Massachusetts Department of Revenue (DOR) regulations require withholding on certain non-resident sales of Massachusetts real property that has a gross sale price of $1 million or more. The regulation, 830 CMR 62B.2.4, is designed to ensure the collection of personal income tax or corporate excise tax from non-resident sellers who might not otherwise file a Massachusetts tax return. (To read the full regulation, click here.)

What qualifies as a non-resident for this purpose? Non-resident sellers (or other transferors of property) include individuals and business corporations with no continuing Massachusetts business presence. A resident includes those domiciled in the commonwealth and those who maintain a permanent place of abode and spend more than 183 days of the taxable year in Massachusetts. A person is a full-year Massachusetts resident if they (1) have been a resident from Jan. 1 of the year in which the real estate transfer occurs through the closing, and (2) represent that they will continue to be a resident after closing.

The standard withholding amount is 4% of the gross sale price, plus an additional 4% on the portion exceeding the millionaire’s tax threshold. The Massachusetts millionaire’s tax threshold for 2026 is $1,107,950. This amount is adjusted annually for inflation. Sellers can elect to use an alternative calculation, which involves withholding on the estimated net gain from the sale, at a rate of 5% for individuals or 8% for corporations.

A withholding agent, usually your attorney or your settlement agent, is responsible for collecting and remitting the tax. Withholding agents must file a Nonresident Real Estate Withholding (NRW) Form and Transferor’s Certification (including the settlement statement from the closing) and remit payment of the withheld funds to the DOR within 10 days of closing.

Certain transferors are exempt from withholding, but an NRW Form and Transferor’s Certification must still be filed to claim the exemption.

Key exempt transferors include full-year Massachusetts residents; certain pass-through entities (excluding single-member LLCs), publicly traded partnerships, and corporations with a continuing business presence in Massachusetts; and estate and resident trusts. Some transactions qualify for full or partial exemption, including spousal transfers and like-kind (Section 1031) exchanges.

For more information on this new regulation and a full list of exemptions, visit the Greater Boston Association of Realtors. As always, your agent is your expert — when in doubt, ask questions!

Kim Foemmel
Foemmel Fine Homes
1 Lumber Street, Suite 207C
Hopkinton, MA
(508) 808-1149
Kim.Foemmel@gmail.com
FoemmelFineHomes.com

The advertiser is solely responsible for the content of this column, which is a paid advertisement.