New Massachusetts Tax Withholding Rule for Non-Resident Sellers
Beginning November 1, a new Massachusetts tax withholding requirement will take effect for certain real estate transactions. This update impacts all property sales of $1 million or more, introducing new steps for both resident and non-resident sellers.
What’s Changing
For every sale where the gross purchase price is $1,000,000 or higher, sellers will be required to complete a Transferor’s Certification Form prior to closing.
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Massachusetts residents will use this form to certify that they are exempt from tax withholding.
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Non-resident sellers (those who do not live in Massachusetts full-time) will have a portion of their sale proceeds withheld at closing. This amount represents an estimate of state income taxes due as a result of the sale.
Important Note for Non-Resident Sellers
This is not a new or separate tax. It is an automatic withholding of Massachusetts income tax that non-residents are already responsible for paying when filing their state tax return. The purpose is to ensure that appropriate taxes are collected at the time of sale.
Non-resident sellers are encouraged to consult with a CPA or tax professional early in the process to estimate their withholding amount and plan accordingly.
Who Handles Compliance
The closing attorney will oversee compliance with the new withholding requirement. However, sellers should still understand the basics of the regulation. As your real estate team, Mission Realty Advisors is here to help educate and guide our clients through these updates, ensuring every transaction remains smooth and compliant.
Resources and Additional Information
For more details about the new Massachusetts withholding rule, including who qualifies for exemptions, how withholding amounts are calculated, and answers to common questions, you can refer to these helpful resources:
Staying Informed About Massachusetts Real Estate Regulations
With real estate laws and tax policies continually evolving, it’s important for both buyers and sellers to stay up to date on regulatory changes. This new rule is designed to improve compliance and streamline the collection of taxes owed from non-resident sellers in Massachusetts property transactions.
About Mission Realty Advisors
At Mission Realty Advisors, we are committed to keeping our clients informed about key changes that impact the Massachusetts real estate market. Our team stays ahead of industry updates, ensuring that both buyers and sellers can make confident, well-informed decisions at every stage of the transaction.
For more guidance or questions about how this new tax withholding requirement may affect the sale of your property, contact us today.