Selling a home in Massachusetts just got a little more complicated for some sellers. As of November 1, 2024, the Massachusetts Department of Revenue (DOR) implemented new withholding requirements that apply to real estate sales with gross proceeds of $1 million or more.
These changes are important for anyone planning to sell property in Massachusetts, especially if you’re counting on your net proceeds for your next purchase. Here’s what you need to know.
What’s Changing
For any qualifying sale that closes on or after November 1, the seller must complete a Transferor’s Certification form. If the seller cannot establish that they are exempt from withholding, they’ll need to withhold 4% of their share of the gross sale proceeds at closing.
Alternatively, the seller may be eligible to calculate withholding based on their estimated net gain, which can result in a lower withholding amount — but that requires accurate documentation and approval.
Who Is Exempt
The DOR provides several exemptions from withholding. The most common is for full-year Massachusetts residents, defined as individuals who:
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Have been residents of Massachusetts since January 1 of the year of sale, and
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Intend to continue being residents after the closing.
In addition to full-year residents, there are ten other exemption categories, including estates of resident decedents and certain pass-through entities.
If you’re unsure whether you qualify, it’s critical to consult your CPA or tax advisor early in the process.
Why It Matters
This new rule could significantly impact your net proceeds at closing, especially for luxury homeowners or sellers in high-value markets like Greater Boston. Even if you’re ultimately exempt, failing to plan ahead could delay your closing or tie up a portion of your proceeds unnecessarily.
For example, sellers who are moving out of Massachusetts shortly after closing or who have complex ownership structures may need to prepare additional documentation to avoid unexpected withholding.
What Sellers Should Do
If you’re planning to sell a Massachusetts property for $1 million or more, here’s how to prepare:
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Talk to your tax advisor early. They can confirm whether you qualify for an exemption or help calculate your estimated net gain.
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Complete the required DOR Transferor’s Certification as soon as possible.
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Coordinate with your agent and attorney to ensure the correct forms are submitted before closing.
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Avoid surprises. Knowing whether withholding applies will help you plan for how much you’ll actually receive at closing.
Our Take
At Berkshire Hathaway HomeServices Warren Residential, we’ve been working closely with sellers, attorneys, and tax professionals to navigate these new requirements smoothly. While the changes add another step to the process, a little preparation goes a long way toward avoiding headaches at closing.
If you have questions about how these rules could impact your sale, or need referrals to trusted local tax professionals, our team is here to help.
Ready to sell or curious how this might affect your property?
Contact Us to speak with one of our experienced agents.
