What Are the Tax Implications in Massachusetts?

When it comes to estate planning and real estate in Massachusetts, understanding the tax implications is vital. We at Jordan & White, LLC, know that dealing with taxes can often feel overwhelming, but we’re here to break it down in simple terms. Whether you’re dealing with estate taxes, inheritance taxes, or property taxes, having a clear understanding of Massachusetts tax laws is essential in ensuring that you make informed decisions that benefit you and your family in the long term.

Estate Taxes in Massachusetts

When planning for the future, the Massachusetts estate tax is an important aspect to consider. It stands out because Massachusetts is among the few states still levying an estate tax. The threshold for this tax is a gross estate value exceeding $2 million, encompassing everything from real estate and personal property to other assets. If your estate’s total value surpasses this mark, it could be subject to the Massachusetts estate tax. 

It’s important to distinguish between the Massachusetts estate tax and the Federal estate tax, as they are two separate entities with different implications. The rates for the state estate tax can vary significantly, depending on the overall size of the estate. For instance, the tax rate can range from 0.8% to 16% based on the estate’s value. This means that for an estate valued at $2 million, the Massachusetts estate tax could be over $100,000.

Another critical aspect is that the $2 million exemption is not a cliff. If your estate is worth slightly over $2 million, you won’t be taxed on the entire amount but only on the value exceeding the exemption. Given the high real estate prices in Massachusetts, particularly on the North Shore, many residents might find themselves subject to this tax without proper planning.

Property Taxes in Massachusetts

Property taxes are an essential aspect to consider for those owning real estate in Massachusetts. Local municipalities levy these taxes, which can significantly differ from one locality to another. Some areas have higher rates due to better amenities or public services, while others offer lower rates.

A crucial element to remember is that numerous exemptions and discounts are accessible to eligible individuals, such as seniors, veterans, and other specific groups. These exemptions and discounts can result in considerable savings on your property tax bill. For instance, the Senior Citizen Property Tax Work-Off Program allows older residents to volunteer in exchange for a reduction in their property taxes. Similarly, the Veterans’ Exemption provides property tax relief to eligible veterans.

Capital Gains Taxes in Massachusetts

Capital gains taxes are another essential aspect, mainly when selling real estate or other significant assets. In Massachusetts, the capital gains tax rate depends on how long you’ve owned the asset and can range from 5% to 12%. Several exemptions and exclusions may be available, which can help reduce or eliminate your capital gains tax liability. Consulting with an attorney can help you understand how these laws apply to your specific situation and ensure you are taking advantage of any available tax benefits.

Contact Us, Jordan & White, Your Estate Planning Attorneys on the North Shore of Massachusetts

At Jordan & White, we are here to help you understand these complexities and make decisions that will benefit your family in the long term. Call us today at 978-744-2811 or contact us online for assistance with crafting a comprehensive estate plan that suits your individual needs.