Is There Capital Gains Tax on the Sale of a House in Massachusetts?
Yes, there is. But the impact is usually zero for many homeowners in Massachusetts—or at least not as severe as expected. This is because of the federal primary residence exclusion. If the house sold was the main home and specific conditions are satisfied, it is true that the gain might not even reach the taxable stage.
Yet, the below subjects should be taken into consideration:
If the property was the primary residence for at least two of the last five years
If you have not claimed a similar exclusion on another property in the last two years
If the capital gain is less than $250,000 (single filers) or $500,000 (married joint filers)
Fulfilling the mentioned conditions above can wipe out most or all of the taxable gain. However, once such limits are exceeded, or if the home sold is a second property, vacation house, or rental—Massachusetts applies its own rate.
Massachusetts Capital Gains Rate
5% for long-term gains (owned for more than one year)
12% for short-term gains (owned for one year or less)
This rate structure is applied no matter the sale amount—what matters is the holding period as well as the type of property sold.
What About Seniors?
It should be acknowledged that age does not exempt anyone from the tax. Initial questions like “Do seniors pay capital gains tax?” or “Is there a capital gains tax age exemption?” are naturally asked. The truth is: capital gains tax varies in line with the income, not age. It is correct that retirees might fall into the 0% federal bracket. Yet, Massachusetts applies its 5% rate regardless.
Key Notes
Massachusetts capital gains tax on real estate in MA is applied after the federal exclusion, if applicable.
Second homes and investment properties do not satisfy qualification for the primary residence exclusion.
Federal vs. state capital gains rates are separate calculations but both might apply.
If you need any assistance with capital gains tax implications in Massachusetts, contact Dimov Associates today.
