The Massachusetts Department of Revenue has issued Final Regulation 830 CMR 62B.2.4, establishing new withholding requirements for certain sales or transfers of Massachusetts real estate. These rules take effect November 1, 2025, and could have significant tax implications for individuals and businesses selling property in the Commonwealth.

Massachusetts Real Estate Tax

Key Points of the New Regulation

  • Who is affected?
    The withholding rules generally apply when the seller (transferor) is a nonresident of Massachusetts, and the gross sales price is $1,000,000 or more.
  • What does it require?
    At closing, a portion of the sale proceeds must be withheld and remitted to the Massachusetts Department of Revenue to cover potential state tax liabilities. This applies to both personal income tax (under M.G.L. c. 62) and corporate excise tax (under M.G.L. c. 63).
  • Effective date:
    These requirements apply to real estate closings on or after November 1, 2025.
  • Important note for future movers:
    Even if you currently live in Massachusetts, if you move out of state and later sell Massachusetts property, you may fall under these withholding requirements in the year of sale.

Why This Matters

This regulation is designed to ensure that Massachusetts collects applicable taxes from property sellers who no longer reside in the state. For sellers, this means:

  • Possible cash flow impacts at the time of closing due to withholding.
  • Additional filing requirements to reconcile actual tax owed versus withheld amounts.
  • The need for advance tax planning, especially if a move out of Massachusetts is being considered before a future sale.

What You Should Do

If you are planning to sell Massachusetts real estate, or might in the future, now is the time to understand how these rules could affect your transaction. We recommend:

  1. Review of your residency status before the sale.
  2. Estimate the potential withholding amount with your tax advisor.
  3. Plan the timing of your sale in light of the November 1, 2025, effective date.

For more details, the full regulation can be found here: 830 CMR 62B.2.4 – Withholding on Sales of Massachusetts Real Estate

Here to Help

LGA’s Financial Strategies and Tax teams are here to help you navigate these new requirements and minimize surprises at closing. Contact us today to discuss how this change may impact you.