Withholding Requirements for Non-Resident Sellers of Real Estate

Effective November 1, 2025

The Commonwealth of Massachusetts has adopted a new withholding tax on the sale of real estate for sellers who meet the following requirements:

1)       The seller is a nonresident of Massachusetts; and

2)      The total sales price of the real estate meets or exceeds

$1,000,000.00.  

Massachusetts is the next to join several states with similar withholding laws. The purpose of this withholding tax is to make certain non-resident, out-of-state sellers file their tax returns and pay any tax or capital gains due to the Commonwealth.

For purposes of calculating the withholding amount on taxpayers subject to the personal income tax, the tax rate is 4% of the gross sales price. Or, if the seller chooses to use the alternative withholding calculation, the tax rate is 5% of the estimated net gain.

If the gross sales price or estimated net gain exceeds the $1M threshold for personal income taxpayers, the withholding agent must withhold an additional 4% on the amount over the $1M threshold.  

The closing attorney is responsible for withholding the funds at closing and paying the withholdings to the Department of Revenue in compliance with this new law.

Sellers with a total sales price of $1M are required to fill out a Form NRW (Nonresident Real Estate Withholding). Even if no amount of withholding was collected, this form must be filed.

Representatives of nonresident sellers of properties selling for over $1M will need to make the seller aware of the potential withholding. They may also advise the seller to retain a CPA or tax attorney to assist them in identifying all deductibles they may not be aware of.

For more information on the new law, please visit mass.gov or contact the team here at Downey Law Group LLC.