Massachusetts
A 1031 exchange in Massachusetts now comes with a certification at closing.
For Massachusetts sales of $1,000,000 or more, every seller signs a Transferor's Certification and the closing agent files Form NRW; for an exchange through an intermediary the certification can exempt the deferred gain if the seller consents to Massachusetts jurisdiction.
If you sell Massachusetts real estate for $1,000,000 or more, you must give the closing agent a signed Transferor's Certification on or before closing, and the closing agent files Form NRW within 10 days even if nothing is withheld. For a nonresident seller, 4% of the gross price is withheld unless the certification reduces it. In a 1031 exchange through a qualified intermediary, the certification can take the deferred gain out of the withholding, but only if you consent to Massachusetts jurisdiction over the tax that falls due if the gain is later recognized.
onezero3one acts as qualified intermediary for exchanges of Massachusetts property, subject to a review of each file before an exchange agreement is signed. We work with your closing agent and tax advisor; we do not give tax or legal advice.
What is specific to this state
The federal rules in IRC §1031 decide whether an exchange qualifies. The items below are state requirements that sit alongside them at closing or on the return. Each links to the official source it was checked against; confirm the current version with your closing agent and tax advisor before relying on it.
| Issue | What applies | Usually handled by | Source |
|---|---|---|---|
| Filing at closing for sales of $1,000,000 or more | For closings on or after November 1, 2025, the closing agent must file Form NRW within 10 days of closing for every Massachusetts sale at or above $1,000,000, even where no tax is withheld. Each seller gives the agent a Transferor's Certification on or before closing. Sales or exchanges of Massachusetts real estate with gross sales price of $1,000,000 or more. | Closing agent files Form NRW and the certifications on MassTaxConnect; each seller signs the certification. | Mass.gov, DOR: Filing and Withholding Rules: Real Estate Sales of $1 Million or More (updated March 4, 2026) Checked September 30, 2026 |
| Withholding rate for nonresident sellers | For nonresident individuals the default withholding is 4% of the seller's share of the gross sales price, with an additional 4% above the surtax threshold; a seller may elect, on the certification, to withhold 5% of estimated net gain instead. Without the election the agent withholds on the gross price. Nonresident sellers and corporations with no continuing Massachusetts presence. | Closing agent withholds and remits; seller elects on the certification at or before closing. | Mass.gov, DOR: Filing and Withholding Rules (updated March 4, 2026); 830 CMR 62B.2.4(3)(c)-(d) Checked September 30, 2026 |
| How a 1031 exchange avoids withholding | Withholding is generally not required on gain deferred under section 1031 if the seller states the deferred gain on the Transferor's Certification and consents to Massachusetts personal jurisdiction for later collection. The 2026 certification has a box for a seller deferring gain under section 1031 using a qualified intermediary. Sellers deferring all or part of the gain through a qualified intermediary. | Seller signs the certification; closing agent attaches it to Form NRW. | 830 CMR 62B.2.4(6)(a) (Mass.gov); 2026 Transferor's Certification, Part 3 Section 3 Checked September 30, 2026 |
| Boot and failed exchanges | Withholding is still required on gain recognized as boot under section 1031(b). If an exchange that appeared to qualify later fails, the seller must notify the Commissioner in writing within ten days after the section 1031(a)(3) periods end and pay the amount that would have been withheld, as an estimated payment. Exchanges with boot; exchanges that fail. | Seller (with tax advisor); intermediary should calendar the 10-day notice. | 830 CMR 62B.2.4(6)(b)-(c) (Mass.gov) Checked September 30, 2026 |
| Deeds excise on each exchange conveyance | The deeds excise (G.L. c. 64D, s. 1) is $2.00 per $500 of consideration ($1.50 in Barnstable County) on the statute's text. DOR Directive 89-14 (1989) says each conveyance in a real estate exchange is subject to the excise and the person making the deed pays; it does not address deeds to an intermediary, and its rate figures predate current rates. All Massachusetts deeds of realty sold for more than $100. | Closing attorney; payer by directive is the maker of the deed. | Mass.gov, DOR Directive 89-14: Exchange of Property (12/11/1989); M.G.L. c. 64D s.1 Checked September 30, 2026 |
The $1,000,000 rule, in effect since November 1, 2025
Massachusetts regulation 830 CMR 62B.2.4 applies to closings on or after November 1, 2025. When the gross sales price of Massachusetts real estate is $1,000,000 or more, the withholding agent, usually the closing attorney or title company, must file Form NRW through MassTaxConnect within 10 days of closing. The agent files it for every transaction at or above the threshold, including ones where all sellers are exempt, and attaches a Transferor's Certification for each seller. If there is no closing agent, the buyer acts as the withholding agent.
Withholding itself falls on nonresident sellers and on corporations with no continuing Massachusetts presence. The default amount is 4% of the seller's share of the gross sales price, with an additional 4% on the part above the surtax threshold ($1,107,750 on the 2026 certification form) for individuals. A seller can instead elect to have withholding computed on estimated net gain, which for an individual is 5% of the estimated gain; that election has to be made on the certification at or before closing, or the agent withholds on the gross price.
How a 1031 exchange fits
The Transferor's Certification has a box for a seller who "will be deferring all or part of the gain under Code § 1031 using a qualified intermediary." Checking it reduces the amount subject to withholding by the portion of the gross sales price attributable to the deferred gain. In the certification the seller acknowledges the amount of gain being deferred and consents to personal jurisdiction in Massachusetts for determining and collecting the taxes, interest and penalties that will be due when the gain is realized. That consent matters most to a seller who lives out of state.
| Situation | What the regulation requires |
|---|---|
| Gain that is deferred | Withholding is not generally required, if the seller gives the closing agent the certification statement and consent to jurisdiction. |
| Boot (gain recognized under §1031(b)) | Withholding is required on that gain, even if the transfer qualifies as a like-kind exchange. |
| Exchange later fails | The seller must notify the Commissioner in writing within ten days after the §1031(a)(3) periods end and pay the amount that would have been withheld, as an estimated payment. |
Two practical points follow. First, the certification is signed at or before closing, so the seller's advisor should estimate the deferred gain and any boot before then. Second, the ten-day notice for a failed exchange is a Massachusetts deadline that runs from the end of the 45-day identification and 180-day exchange periods, so it is worth putting on the calendar when the exchange starts. The deadline calculator gives both federal dates.
Deeds excise on each conveyance
Massachusetts taxes a deed by which realty is sold under G.L. c. 64D, § 1: $2.00 for each $500 of consideration, or $1.50 in Barnstable County, on the statute's own text. Confirm the total rate with your closing attorney, because the Department's 1989 directive describes an added surtax that was in force then. The statute does not name the payer. The Department's Directive 89-14 says the tax is paid by the person making or signing the deed, and that when parties exchange real estate the conveyance of each parcel is subject to the excise. The directive speaks of two parties trading directly and does not discuss a deed to an intermediary, so ask your closing attorney how the Registry will treat the deeds in a deferred exchange.
Timeline for a Massachusetts sale of $1,000,000 or more
- Before closing: sign the exchange agreement; the seller and advisor estimate deferred gain and boot.
- On or before closing: the seller signs the Transferor's Certification, including the exchange box and consent, and gives it to the closing agent.
- Within 10 days after closing: the closing agent files Form NRW and the certification, and remits any withholding.
- Day 45 and day 180: identification and purchase, as in any exchange.
- Within 10 days after the periods end, only if the exchange fails: written notice to the Commissioner and payment of the amount that would have been withheld.
Questions Massachusetts sellers ask
Does Massachusetts withhold on a 1031 exchange of a $900,000 property?
Not under 830 CMR 62B.2.4. The withholding and filing requirements apply when the gross sales price is $1,000,000 or more. Whether any Massachusetts return obligation applies is a question for your tax advisor.
I live in Florida and I am exchanging a $2 million Massachusetts building. What do I sign?
The Transferor's Certification for each seller, with the §1031 qualified intermediary box checked, the deferred gain acknowledged, and the consent to Massachusetts jurisdiction. Any cash or other boot you receive is still subject to withholding.
Is the withholding a final tax?
The Department describes it as an amount reasonably equivalent to the tax that will be due on the nonresident's gain. How it is credited on your return is a question for your tax advisor.
Is the deeds excise waived for an exchange?
The Department's directive treats each conveyance in a real estate exchange as subject to the excise. We have found no exemption for exchanges, so confirm treatment of your deeds with your closing attorney.
Related
Sources
- Mass.gov, DOR: Filing and Withholding Rules: Real Estate Sales of $1 Million or More (checked September 30, 2026)
- 830 CMR 62B.2.4, Withholding on Sales of Massachusetts Real Estate (checked September 30, 2026)
- DOR 2026 Transferor's Certification and instructions (checked September 30, 2026)
- M.G.L. c. 64D, s. 1 (checked September 30, 2026)
- DOR Directive 89-14: Exchange of Property (checked September 30, 2026)
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