What Buyers, Sellers, and Agents Need to Know About the New Regulation Taking Effect November 1
A new Massachusetts regulation is now in effect, and it’s important for anyone involved in real estate. Especially sellers, agents, and attorneys, to understand how it impacts upcoming transactions. Beginning November 1, all Massachusetts property sales with a gross purchase price of $1,000,000 or more will include a new tax withholding requirement for sellers who are not full-time Massachusetts residents.
This isn’t a new tax, but it does change the timing of when certain taxes are collected. Here’s a clear breakdown of how it works and what your clients need to know.
Who Must Complete the New Certification Form?
For every qualifying sale ($1M+), all sellers will be required to complete a document called a Transferor’s Certification prior to closing.
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Massachusetts residents will use this form to state that they are exempt from any tax withholding at closing.
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Non-resident sellers, however, will not be exempt and will have a portion of their proceeds withheld automatically.
How the Withholding Works
For non-resident sellers, the state will withhold an estimated amount of Massachusetts income tax related to the sale. This is not an additional tax—it’s an upfront collection of taxes that would already be due when the seller files at tax time.
Because the withholding can be significant, sellers who live outside Massachusetts are strongly encouraged to:
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Connect with their CPA early in the process
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Request an estimate of what their withholding amount will be
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Understand how the withholding will affect their net proceeds
Taking these steps before listing—or at least before the property goes under contract—can prevent surprises at closing.
What Agents Should Know
While the closing attorney is ultimately responsible for complying with the new regulation, real estate agents should be knowledgeable and prepared to guide clients toward the right resources.
Key reminders for agents:
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Be aware of the new rule for any transaction at $1M or above
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Let non-resident sellers know early about the withholding requirement
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Encourage them to speak with their accountant to understand financial implications
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Keep updated with the latest details from the state and MAR (Massachusetts Association of Realtors)
By anticipating client questions and providing clarity, agents can help ensure a smoother transaction.
A Change Designed for Transparency & Compliance
This withholding requirement brings Massachusetts in line with practices already in place in several other states. Ultimately, it helps ensure that estimated income taxes tied to real estate sales are collected efficiently and fairly.
For non-resident sellers, understanding this regulation ahead of time is crucial. With the right preparation and communication between agents, attorneys, and accountants—closing should continue to move forward without disruption.
