Massachusetts conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and Massachusetts capital-gains tax. Massachusetts generally taxes capital gains as ordinary income at rates up to 9%. Massachusetts also enforces a clawback rule (see below). The 9% figure includes the 4% millionaire surtax on income above ~$1M.
Massachusetts is a clawback state. If you exchange Massachusetts property into a replacement property in another state, Massachusetts preserves its right to tax the originally-deferred gain — and typically requires you to file an annual report tracking that gain until you finally recognize it. Plan for this before exchanging out of state.
Yes. Massachusetts conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and Massachusetts capital-gains tax. You still must use a Qualified Intermediary, identify replacement property within 45 days, and close within 180 days.
Massachusetts taxes capital gains as ordinary income, with a top marginal rate of about 9%. A 1031 exchange defers this state tax along with the federal tax.
Yes. Massachusetts is a clawback state — if you exchange Massachusetts property into an out-of-state replacement, Massachusetts preserves its right to tax the originally-deferred gain and generally requires annual reporting until you finally recognize it.
Nonresident seller withholding may apply at closing.
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Disclaimer: This page is general education, not tax or legal advice, and reflects commonly-cited 2025 rules. Confirm current rates and requirements with a qualified tax advisor and a Qualified Intermediary before acting.