Thinking of Moving Out of State?  Not So Fast!

Welcome to Market & Moments, where real estate broker Susan Kadilak shares market updates and lessons learned from more than two decades in the business.

Recently, I sat down with long-time Burlington residents who were beginning to plan their next chapter in a much warmer, sunnier state. It was obvious they loved their home and had taken great care of it. Based on recent sales in their neighborhood, the home would likely sell for around $1.2 million.

They expected to have the typical conversations about timing, market conditions, pre-sale repairs, and moving logistics. What they didn’t expect was to learn that selling their home now comes with a significant new requirement that could temporarily withhold tens of thousands of dollars at closing, even though it’s their primary residence.

Their reaction was immediate: “Wait… what?”

They’re not alone.

New Rules as of November 1, 2025

Effective November 1, 2025, Massachusetts implemented new real estate tax withholding regulations for non-resident sellers, which includes those sellers planning to move out of state after the sale. According to guidance from the Massachusetts Association of Realtors, the rule applies when:

• The gross sales price is $1,000,000 or more, and
• The seller is not considered a full-year Massachusetts resident.

If both conditions are met, the sale is now subject to mandatory state tax withholding at closing.

A seller is considered a full-year Massachusetts resident only if they:

• Lived in or spent more than 183 days in the MA during the tax year, AND
• Certify that they will continue to be a Massachusetts resident after closing.

Importantly, full-year Massachusetts residents are exempt, but sellers must certify their residency status in writing. If a seller is moving out of state or currently lives out of state, they may no longer qualify for the exemption.

This is exactly what surprised the Burlington homeowners. They assumed residency was based on where they lived before the sale, not where they planned to live after.

How Much Is Withheld?

The state provides two calculation options for non-resident sellers:

• Default method: 4% of the gross sales price
• Alternative method: 5% of the seller’s estimated net gain

The funds withheld are sent to the Massachusetts Department of Revenue and credited toward the seller’s final state tax liability. If too much is withheld, the seller can recover the difference when they file their Massachusetts tax return. That said, the timing matters. For many sellers, having a large sum of money tied up for a period of time after closing can create issues if they were planning on using those funds for something else.

Why This Matters Now

For homeowners considering a move out state, this regulation can dramatically change how much of your sale proceeds you can expect to receive at closing.

The Burlington homeowners I met with were caught off guard by the timing and scale of the withholding. Once they understood the rule, they were grateful they learned about it before listing their home, not at the closing table.

If you’re thinking about selling a Massachusetts property valued at $1 million or more and plan to move out of state, this new requirement deserves early attention. Understanding how residency is defined, how withholding is calculated, and how it affects net proceeds can prevent stressful surprises later. For more information, check out the FAQ’s here.