Overview
The withholding rules on sales or exchanges of real estate generally require a withholding agent to withhold an amount reasonably equivalent to the personal income tax or corporate excise, as applicable, that will be due on the net gain from a non-resident’s sale or exchange of Massachusetts real property. The withholding requirement only applies when the gross sales price is $1,000,000 or more. Non-resident sellers (or other transferors of property) include individuals and business corporations with no continuing Massachusetts business presence. DOR has issued a regulation, 830 CMR 62B.2.4, that explains the withholding requirements in detail.
Transferor’s Certification Form & Instructions
For every sale or exchange of Massachusetts real estate when the gross sales price is $1,000,000 or more, each seller must complete a Transferor’s Certification (PDF) and give it to the withholding agent on or before closing. The withholding agent will use this information to file a return. This form and the return must be completed even if no amount of withholding is collected.
File and Pay on MassTaxConnect
Withholding agents must use MassTaxConnect to file the withholding return and remit the payment.
How to file and pay on MassTaxConnect without logging in:
- Go to the MassTaxConnect homepage.
- Select the File and Pay Nonresident Real Estate Withholding Tax hyperlink in the File section.
- File the Return: You will file the Form NRW (Withholding on Sale of Real Estate) for the sale.
- Make a Payment: The withholding must be remitted electronically along with the return. You can make an ACH debit or Credit Card Payment through MassTaxConnect.
If the withholding agent is already registered with MassTaxConnect, they can easily add a Nonresident Real Estate Withholding account:
- Log in: Log in to your existing MassTaxConnect account.
- Register: From the Summary page, choose More
- Under Access, choose Add an Account, New Location, or New License.
- Check the Box for Nonresident Real Estate Withholding
- Complete the Registration process.
- When complete, you will receive a confirmation email.
- Access to the Account: Return to the Summary page and click 'Add Access to the Nonresident Real Estate Withholding Account'.
- File the Return: Click on View Returns, select the Period/Closing Date for the Nonresident Real Estate Withholding you will file for the Form NRW (Withholding on Sale of Real Estate) for the sale.
Make a Payment: The withholding must be remitted electronically along with the return. You can make an ACH debit or Credit Card Payment through MassTaxConnect.
Frequently Asked Questions
When will the withholding requirements go into effect?
The regulation provisions are effective for real estate closings that occur on or after November 1, 2025.
What are the new withholding requirements?
Generally, a withholding agent (usually the closing attorney or title company) is required to withhold a certain amount of tax on behalf of the seller at the time of the sale of real estate when the gross sales price is $1,000,000 or more.
The withholding agent must also file a return (see also, “What is a Form NRW?”) and remit the amount withheld to the Department of Revenue within 10 days of closing.
Who is required to serve as the withholding agent?
The withholding agent is the person who is responsible for closing a real estate transaction. In many cases the withholding agent will be a closing attorney, escrow company, or title company involved in the real estate transaction. The withholding agent can also be any other person who receives or disburses the money (or other consideration) for the real estate transaction.
What happens if there is no withholding agent?
If there is no representative responsible for closing the real estate transaction (e.g., a closing attorney) and the only parties involved in a real estate transaction are the seller and buyer, the buyer will be required to act as the withholding agent and will be responsible for filing the Form NRW and Transferor’s Certification, and collecting and remitting the withholding amount to DOR.
How is the withholding amount calculated?
The amount withheld is calculated based on the gross sales price, unless the seller elects to use the alternative withholding calculation (see also, “What is the alternative withholding calculation?”).
The amount withheld may also be reduced or eliminated, where the seller certifies to the withholding agent that they are exempt from withholding or that a lesser amount of tax is due (see also, “What is a Transferor’s Certification?”).
Finally, the tax rate will change depending on who the seller is and whether they elect the alternative withholding calculation (see also, “What tax rate should be used for purposes of calculating the withholding amount on taxpayers subject to the personal income tax?” and “What tax rate should be used for purposes of calculating the withholding amount on taxpayers subject to the corporate excise?”)
What is the gross sales price?
The gross sales price is the total amount that the seller receives, or will receive, from the sale or exchange of real estate. This includes cash, the fair market value of other property, and the outstanding balance of liabilities assumed by the buyer.
What is the alternative withholding calculation?
The alternative withholding calculation is the seller’s estimated net gain from the sale or exchange of real estate, multiplied by the tax rate applicable to the seller. The seller must elect to calculate the withholding amount using the alternative withholding calculation. Without an affirmative election, the withholding agent must withhold on the gross sales price.
What tax rate should be used for purposes of calculating the withholding amount on taxpayers subject to the personal income tax?
The tax rate for purposes of calculating the withholding amount on taxpayers subject to the personal income tax is 4% of the gross sales price. If the seller elects to use the alternative withholding calculation, the tax rate is 5% of the estimated net gain.
Where either the gross sales price or the estimated net gain, as applicable, exceeds the surtax threshold for personal income taxpayers, the withholding agent must withhold an additional 4% on the amount over the surtax threshold.
What tax rate should be used for purposes of calculating the withholding amount on taxpayers subject to the corporate excise?
The tax rate for purposes of calculating the withholding amount on taxpayers subject to the corporate excise is 4% of the gross sales price. If the seller elects to use the alternative withholding calculation, the tax rate will be 8% of the estimated net gain.
What is a Transferor’s Certification?
A Transferor’s Certification is a form created by DOR to be used by sellers and withholding agents for purposes of certifying the amount of withholding on sales or exchanges of real estate. For every sale or exchange of Massachusetts real property when the gross sales price is $1,000,000 or more, each seller must complete a Transferor’s Certification and give it to the withholding agent on or before closing. The withholding agent will use the information provided on the Transferor’s Certification to complete and file Form NRW: Nonresident Real Estate Withholding. On the Transferor’s Certification, the seller must attest to any applicable exemptions from, or reductions to, the withholding requirement. If the seller makes an election to withhold based on the alternative withholding calculation and certifies the estimated net gain amount on the Transferor’s Certification, then the withholding agent withholds on the estimated net gain amount.
Note, a Transferor’s Certification is not required where the seller is a government entity.
Can the Transferor's Certification be signed electronically?
Yes, the Department of Revenue accepts electronically signed documents in accordance with Directive 20-1: Acceptance of Electronic Signature.
What happens if the seller does not provide a Transferor’s Certification?
Where the seller does not provide a signed Transferor’s Certification by or before the time of the sale of real estate, the withholding agent must withhold on the gross sales price at the applicable rate.
What is Form NRW?
The Form NRW: Nonresident Real Estate Withholding, is the return a withholding agent is required to file for every sale or exchange of Massachusetts real property when the gross sales price is $1,000,000 or more. This form must be filed even if no amount of withholding was collected.
When does a withholding agent have to file Form NRW and remit the withholding?
The withholding agent is required to file Form NRW and remit the amount of withholding collected electronically through MassTaxConnect within 10 days of the closing. If no withholding is required, the withholding agent will file Form NRW reporting zero tax due and must attach a Transferor’s Certification indicating why withholding was not required.
In filing the form and remitting the withholding, the withholding agent may rely in good faith on the information provided in the Transferor’s Certification. Good faith is presumed in the absence of evidence of bad faith.
Will penalties for failure to withhold apply as of November 1, 2025?
No. DOR acknowledges that withholding agents may require additional time to familiarize themselves with Form NRW in order to comply with the requirements of the regulation. As such, for closings occurring November 1 through November 30, 2025, DOR will waive any penalties imposed on withholding agents for failing to file the Form NRW and/or withhold on such sales.
Are there other documents the withholding agent is required to submit with Form NRW?
Yes, there are two additional types of documents that must be submitted electronically with Form NRW. The withholding agent is required to submit a Transferor’s Certification for each seller, except where the seller is a government entity. The withholding agent is also required to attach the HUD statement when submitting the Form NRW.
What if there is more than one seller?
If there is more than one seller, the amount of withholding from each seller must be determined separately. However, the determination of whether the gross sales price is $1,000,000 or more is based on the entire transaction.
For example, four taxpayers own an equal share of a building that is sold. The gross sales price of the building is $1,600,000. No other expenses or exemptions apply to the sale. Each of the sellers will receive less than $1,000,000, but the gross sales price exceeds the threshold. The withholding agent will have to withhold the tax that would be due from each taxpayer. Each taxpayer must provide the withholding agent with a Transferor’s Certification, on which each taxpayer must make various certifications including whether they qualify for any withholding exemptions or reductions, and whether they elect for the withholding agent to withhold an amount based on the alternative withholding calculation.
When filing Form NRW, the withholding agent will submit separate Transferor’s Certifications for each seller.
If there are multiple sellers, does each seller need to provide a Transferor Certification to the withholding agent?
Yes. Where there are multiple individuals selling the property, each individual must complete a Transferor Certification. Where the sale is by an entity that is disregarded for tax purposes, such as a trust not taxed at the entity level, including a grantor-type trust entity, the seller is the beneficial owner of the entity. Each seller that is considered a beneficial owner must complete a Transferor Certification.
Who is exempt from withholding?
The following types of sellers will be exempt from the withholding requirements, but only if they provide a Transferor’s Certification:
- Full-year Massachusetts residents
- Pass-through entities
- Publicly traded partnerships
- Estates of resident decedents
- Resident trusts
- Corporations with a continuing Massachusetts business presence
- Organizations qualified under Internal Revenue Code (Code) § 501(c)(3), unless the sale/transfer results in unrelated business taxable income
- Insurance companies
- The U.S. government, Massachusetts, or any political subdivision, or their respective agencies
- The Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or a private mortgage insurance company
- Financial institutions
- Certain real estate investment trusts
What is required if the seller is exempt from withholding?
Even where a seller has provided a Transferor’s Certification attesting they are exempt from withholding, a withholding agent is required to file a Form NRW where the gross sales price from the transaction equals or exceeds the threshold. The Transferor’s Certification must be submitted with Form NRW.
Where a seller is not exempt, are there nevertheless circumstances where withholding is reduced or eliminated?
There are several circumstances where the amount required to be withheld may be reduced or eliminated, but only if the seller provides a Transferor’s Certification. These exceptions can be found in 830 CMR 62B.2.4(5) and include the following:
- Sales where the required withholding amount is greater than the amount by which the sales price exceeds amounts used for the payment of the seller’s debts secured by a mortgage or other lien on the property that are paid at the closing.
- Foreclosure sales where the sales price does not exceed the debt secured by the property held by a mortgagee or lienholder.
- Certain involuntary or compulsory conversions of property under Code § 1033.
- Sales where the property is only partly located in Massachusetts; and
- Sales where a portion of the gain is not recognized under M.G.L. c. 62 or M.G.L. c. 63.
These exceptions may reduce or eliminate the amount of withholding due regardless of whether the withholding amount is calculated based on the gross sales price or using the alternative withholding method. A seller must indicate on the Transferor's Certification that it is eligible for a reduction from the full amount of withholding otherwise due. The withholding agent must submit the Transferor’s Certification with Form NRW.
Who is responsible for remitting the amount withheld?
The withholding agent is required to remit the amounts withheld and may be subject to penalties for failure to withhold.
How does a seller claim a credit for the amount withheld at the time of sale?
The seller must report the gain from the sale of Massachusetts real estate on their individual or corporate tax return for the tax year in which the sale takes place. The seller will claim the amount withheld as a credit when they file their individual or corporate tax return and it will reduce or eliminate any tax due with the return. Any amount withheld that exceeds the seller’s tax due on the return will result in an overpayment, subject to any allowable offset or intercept. The seller will then select whether to have the overpayment applied to their estimated tax or refunded.
What payment methods are accepted?
You can pay directly from a bank account (Electronic Fund Transfer (“EFT”)) or with a Debit/Credit card or digital wallet payment.
Please note: If you are using a bank account for the first time in MassTaxConnect, a prenote (test transaction) may be sent to your bank to verify your account before withdrawing the payment.
I need a copy of the Form NRW, Nonresident Real Estate Withholding Return for my records. Can I get a copy of the return?
Yes, once you have filed and paid you Form NRW, your can get a copy on MassTaxConnect.
- Log into your MassTaxConnect account.
- Navigate to your Nonresident Real Estate Withholding account.
- Select “View Returns”
- Click the “View or Amend Return” for the period you need.
- Select “Save a Copy of Return”
- A copy of your Form NRW for that period will be displayed.
- You can print or download a copy for your records.
Note: for transactions with multiple Transferors, the copy will have a summary page followed by a separate page with information for each Transferor.
Will the Transferor receive a statement of the amount withheld to use when filing their tax return?
Yes. In addition to the statement provided by the withholding agent, in January of every year DOR will issue a Massachusetts Nonresident Real Estate Withholding Statement to a Transferor that had withholding tax paid on their behalf in the prior calendar year. For example, a property is sold on November 10, 2025, and withholding is remitted on November 14, 2025, with Form NRW on behalf of three Transferor’s. Each of the three Transferor’s will receive a statement at the end of January 2026, showing how much was withheld on behalf of that Transferor.
The Transferor will need this information when claiming the withholding on their Massachusetts return, similar to a Form W-2 or 1099.
If spouses are joint owners of the property being sold, is the withholding agent required to collect a Transferor’s Certification from each spouse?
Yes. Each spouse must provide the withholding agent with a Transferor’s Certification. The sales price of the jointly owned property should be allocated to each spouse in equal amounts. If each amount is less than the surtax threshold, withholding for the surtax is not required. However, the sellers may be required to make an estimated tax payment to account for any surtax liability, if they intend to file a joint Massachusetts personal income tax return reporting the sale of the property.
Does a withholding agent need to upload a Transferor’s Certification for each Transferor when submitting Form NRW?
Yes. After entering the information on Form NRW, the withholding agent will see a screen called “Settlement Statement (HUD-1) and Transferor Certifications.” This screen will list all the Transferors required to attach certification. The withholding agent must upload each Transferor’s Certification separately when the transaction includes multiple Transferors. This ensures that withholding amounts are accurately allocated and helps maintain confidentiality of taxpayer records.
Can a withholding agent file Form NRW using a paper form?
No. Form NRW is not available as a paper form. It is an electronic form on MassTaxConnect and must be completed and submitted through MassTaxConnect. When completing the return, the withholding agent will enter their information, like their name, address and identification. In addition, they will have to enter information about the transaction, like closing date and gross sales price. Finally, the withholding agent will enter information about each individual Transferor relating to the transaction, which is the same information that is on the Transferor’s Certification. A fillable PDF of the Transferor’s Certification is available online, that may be completed electronically and then printed. Form NRW can be filled out on MassTaxConnect as early as the day of closing and is required to be filed within 10 days of closing.
Contact Us
If you have questions, email us at NRREWH@dor.state.ma.us or call (617) 887-6367.