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Serving
Massachusetts Agencies

Sales by "Foreign Persons"

Taxes—Income and Withholding

Sales of property, when made by "foreign persons," may require the buyer to withhold certain amounts from the transaction and remit those funds to the Internal Revenue Service. There are certain exceptions that apply that obviate the necessity for such withholding, the most common being where a sales price of less than $300,000 is realized by the seller. However, it should be noted that this exception to the withholding requirement applies only when the buyer will be using the property as a "residence," which means that the buyer or his family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of the transfer. That means, for example, that if the property is being purchased as an investment to be rented out to others who will use the property more than the buyer or his family, then withholding is required if the seller is a "foreign person, even where the sales prices is less than $300,000.