On November 1, 2025, the Massachusetts Department of Revenue (the “DOR”) enacted new regulations under 830 CMR 62B.2.4 that changes how certain real estate sales are taxed when the gross sales price reaches a new threshold. As part of this new rule, sellers (or “transferors”) must now complete a “Transferor’s Certification” for qualifying transactions. A qualifying transaction under the new regulation means any sale or exchange of real estate where the gross sales price is $1,000,000.00 or more.
Under the new regulation, when a Massachusetts-located property sells for $1 million or more, the closing attorney, escrow agent, or title company is required to withhold a portion of the sale proceeds for state income tax or corporate excise tax, unless the seller qualifies for an exemption or reduction. As such, the certification form collects standard identifying information from the transferor, such as name, SSN/TIN, address, residency and tax-filing status, and details about the property that is being sold. Most importantly, the form asks the transferor to certify whether they qualify for an exemption from withholding or whether the withholding should be reduced.
The new regulation is the DOR’s new gatekeeper, and is intended to target non-residents of Massachusetts who are selling Massachusetts-based real estate, as the DOR is likely seeking to enforce tax compliance on real estate gains by non-residents by ensuring that sales of in-state properties are taxed appropriately and at the time of closing, even if the seller is not a Massachusetts taxpayer. However, the requirement technically applies to any sale that is over the $1m gross sales price, regardless of residency. A seller is eligible to claim an exemption or reduction if they fall under a listed exemption – for example, if they are full-year Massachusetts resident, or if they are a business entity with a continuing in-state presence.
This adds new administrative and financial burdens for high-value real estate transactions, as sellers must complete the Transferor’s Certification, signed under the penalty of penalty, and the closing agent must file the certification within 10 days of closing. Even if a transferor qualifies for an exemption, they still must complete the form and submit it properly. Additionally, if there are multiple transferors, each must complete a separate certification, even though the $1m threshold is based on the total transaction price, and even if each transferor’s ownership percentage is less than the $1m threshold. This affects not only the seller of the Massachusetts-based property, but also the buyers, attorneys, and closing agents, as this results in additional paperwork and a potential withholding payment. Failure to properly comply with these regulations could result in withholding on a gross price (instead of net gain) or penalties for the agent. The practical and realistic effects of this new regulation include more documents required at closing, potential delays in closing if the seller fails to provide the certification or inaccurately fills out the certification, cash flow implications for sellers (as withholding is taken from sales proceeds immediately), and increased liability for closing attorneys.
If you are selling a high-value property in Massachusetts, whether residential or commercial, the best way to ensure compliance is to consult with an attorney and have that attorney assist you in filling out the certification and making sure that it is properly submitted. If you are selling a property or planning to sell a property with a gross sales price of over $1M, please reach out to Sarah Bierman (sarah@amcondolaw.com).
Written by
Sarah Bierman
sarah@amcondolaw.com
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