Own Property In Multiple States? What You Need To Know About Recent Changes To The Massachusetts Estate Tax

The estate tax exemption in Massachusetts is far below the federal level. In fact, the Massachusetts estate tax exemption—$2 million—is one of the lowest in the entire country. Notably, the estate tax exemption recently doubled from $1 million. With that increase, came other changes—including a reform that impacts people who own property in other states.

A non-resident who owns real property within Massachusetts could potentially be subject to estate tax liability even if their Massachusetts property is valued at less than $2 million. Here, our Boston estate planning attorney highlights the key points you should know about the Massachusetts estate tax if you own property in multiple states.

Know the Old Law: Out-of-State Real Estate Not Counted for Estate Tax Threshold 

Under the previous estate tax law in Massachusetts, the value of real estate owned outside of the state was not considered when calculating whether an estate exceeded the estate tax threshold. The threshold for an estate tax exemption used to be only $1 million. A resident of Massachusetts could own property in other states without worrying about those assets pushing their estate over the Massachusetts exemption limit. For example, if an individual owned a primary residence in Massachusetts valued at $900,000 and a vacation home in Florida valued at $300,000, that Florida real estate would actually not be counted as part of the estate for estate tax purposes. 

New Law in Massachusetts: Value of Out-of-State Real Estate Will Be Considered 

The recent legislative change in Massachusetts marks a significant shift in how estate taxes are calculated for state residents. Now, the value of out-of-state real estate is included in determining whether an estate exceeds the Massachusetts exemption threshold. This change means that all real estate—regardless of its location—will be considered when assessing the estate’s total value for tax purposes. Though, the estate tax exemption is now $2 million.

For example, imagine that a Massachusetts resident owns three properties: A house in Boston worth $1.2 million, an apartment in Florida worth $500,000, and a condo in New York worth $600,000. The total value of that real property is $2.3 million. As that would exceed the exemption level, the estate would be subject to Massachusetts estate tax. It no longer matters that some real estate is located in another jurisdiction. 

A Comprehensive Estate Plan is a Must 

Estate planning is complicated, especially for those who own real property in multiple states. An effective estate plan is essential, ensuring your assets are distributed according to your wishes while minimizing taxes and legal complications. There are estate planning strategies that could potentially reduce Massachusetts estate tax liability. 

Contact Our Boston Estate Planning Attorney Today

At Fisher Law LLC, our Boston estate planning lawyers are standing by, ready to protect your rights. If you have any questions about the estate tax in the Commonwealth, we are here as a resource. Contact our firm today for a completely confidential case review. We provide estate planning services throughout the Greater Boston area, including Suffolk, Norfolk, Middlesex, Plymouth and Bristol Counties.