Bulletin: MA2025003

Dear Associates:

The Massachusetts Department of Revenue (“DOR”) has enacted 830 CMR 62B.2.4 (the “Regulation”), which will impact all transfers where the gross sales price equals or exceeds $1,000,000.00 ($1 million). The rule becomes effective on November 1, 2025, and will impact transfers occurring on and after that date.

Background:

The DOR has enacted this new Regulation to establish withholding requirements for sales or transfers of Massachusetts real estate beginning on November 1, 2025. The new Regulation requires that the withholding agent submit a return to the DOR Commissioner within 10 days of closing, and remit withholding amounts, if any, for all applicable transactions.

Terms Defined by the Regulation:

The Withholding Agent is defined by the Regulation as the person responsible for closing the real estate transaction, including an attorney, escrow company, title company, or any other person who receives and disburses the consideration or value for a transfer of real estate.

The Gross Sales Price is the sum of the cash paid or to be paid, the fair market value of other property transferred or to be transferred, and the outstanding amount of any liability assumed by the Transferee.

The Closing is defined as the date of the Settlement.

The Settlement is defined as the passage of the deed and title from the seller to the buyer.

The Transfer is defined as the sale or conveyance of real estate for consideration.

The Transferor’s Certification is a certification that a Transferor must complete and provide to the

Withholding Agent for a Transfer in which the Gross Sales Prices equals or exceeds $1,000,000.00.

What You Should Know:

The Regulation applies to all real estate, both residential and commercial properties. For any real estate transaction where the Gross Sales Price is $1,000,000.00 or more, the settlement agent is required to file the withholding return, remit the withholding payment, if any, and provide the Transferor’s Certification, along with the settlement statement to the DOR Commissioner within 10 days of the Closing. The documents must be remitted and payment made electronically through MassTaxConnect.

It is important to note that even if no withholding payment is required to be made because of an applicable exemption, a return must still be filed.

The settlement agent must provide a copy of the filed return and Transferor’s Certification to the Transferor, no later than the due date for the filing. If a tax payment is made, the settlement agent must also provide a copy of the receipt to the Transferor showing that payment was made.

The Regulation provides numerous exceptions to withholding, and a Transferor may certify to the settlement agent that a specific exception is applicable so that no withholding payment must be made with the filing. The exceptions include, but are not limited to, the Transferor being a full year Massachusetts resident, a corporation with a continuing Massachusetts business presence, and like-kind exchanges. A settlement agent may rely in good faith on the representations made in the Transferor’s Certification and in the absence of bad faith, the settlement agent can presume the Transferor’s Certification has been executed in good faith.

If no exemption applies, or only a partial exemption applies, the Transferor in the Transferor’s Certification must provide the necessary information to determine the withholding amount.

For individuals, the tax rate for calculating the withholding amount will vary from 4% or 5% depending on whether the Transferor elects to calculate the withholding based on the Gross Sales Amount or the alternative withholding amount, which is an amount based on the Transferor’s Estimated Net Gain, as defined by the Regulation. Further, if the Gross Sales Price or estimated net gain, as applicable, exceeds the surtax threshold for personal income taxpayers, an additional 4% on the amount over the surtax threshold must be withheld and paid to the Commissioner.

For corporations, the tax rate for calculating the withholding amount will vary from 4% or 8% depending on whether the Transferor elects to calculate the withholding based on the Gross Sales Amount or the alternative withholding amount.

Completing the Transferor’s Certification may require guidance and expertise from a tax professional and it is recommended that the Transferor consult with such professionals in advance of closing so that the Transferor’s Certification can be completed and delivered to the settlement agent on or before the closing. If the Transferor does not provide the Transferor’s Certification before the return is filed, no exemption can be claimed, and the settlement agent must withhold and remit the withholding amount to the Commissioner.

Withholding Return and Transferor Certification:

The Regulation provides that the DOR will promulgate both the Transferor’s Certification form and the return form. As of the publication of this bulletin, the DOR has not released the tax filing form and has only released a draft Transferor’s Certification. To view the Draft Transferor Certification and instructions, follow this Massachusetts Real Estate Transferor's Certification.

We expect that the Transferor’s Certification will have some changes before finalization.

At present, although the return to file is named Form NRW, the form has not yet been published.

To view the DOR’s FAQ page on the Regulation, follow this link.

If you have any questions relating to this or other bulletins, please contact your Massachusetts underwriting team at massuwing@stewart.com or at 1-800-628-2988.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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