Massachusetts landlords have specific legal obligations when selling tenant-occupied properties — and specific tax consequences that differ from a primary residence sale. Here's the complete picture.
The most important thing Massachusetts landlords need to understand: under MGL Chapter 186, Section 13, a tenant's lease survives the sale of the property. If your tenant has a fixed-term lease through June 30, they have the right to remain through June 30 regardless of who owns the building. You cannot force them to vacate simply because you're selling. The buyer takes on the landlord role and must honor the existing lease terms.
For month-to-month tenants, notice requirements under MGL Ch. 186 § 12 apply — 3 months for tenancies over 1 year, 1 month for shorter tenancies. But critically, you don't need to wait for vacancy before selling. A cash buyer purchases the property with the tenant in place and becomes the new landlord at closing.
| Tenancy Type | Notice Required | Sale Path |
|---|---|---|
| Fixed-term lease (any duration) | None — lease survives sale under MGL Ch. 186 § 13. Tenant stays through lease end. | Sell with tenant in place. Buyer assumes landlord role. |
| Month-to-month tenant, 1+ year tenancy | 3 months (MGL Ch. 186 § 12) | Provide notice 3 months before desired vacancy. OR sell with tenant in place. |
| Month-to-month tenant, under 1 year | 1 month (MGL Ch. 186 § 12) | Provide 1-month notice. OR sell with tenant in place. |
| At-will tenant (no written lease) | Rental period or 30 days (whichever is longer) | Standard notice. Tenant must vacate or becomes holdover. |
| Cash buyer purchase (any tenancy) | None required before sale | Sell immediately with tenant in place — buyer takes over as landlord. Fastest path to close. |
Selling an investment property in Massachusetts triggers different tax treatment than selling a primary residence. There is no § 121 exclusion for rental properties — 100% of the gain is taxable. Two separate tax events occur: depreciation recapture (taxed at 25% federal) and capital gains on appreciation (taxed at 0–20% federal based on income level). Massachusetts taxes both at ordinary income rates (5% long-term, 8.5% short-term at state level).
| Tax Item | Federal Rate | MA Rate | Deferral Option |
|---|---|---|---|
| Capital Gain (Appreciation) | 0%, 15%, or 20% (based on income) | 5% long-term or 8.5% short-term | 1031 exchange (defer indefinitely) |
| Depreciation Recapture | 25% (Section 1250 recapture) | 5% (ordinary income rate) | 1031 exchange (defer); stepped-up basis at death eliminates |
| Net Investment Income Tax (NIIT) | 3.8% (on high earners over $200K/$250K) | N/A — MA does not have NIIT | 1031 exchange (defer) |
No eviction required. No vacancy wait. We take on the landlord role at closing. Cash offer in 24 hours.
Call (401) 396-7427Get Cash Offer →Yes — MGL Ch. 186 § 13 says leases survive sale. Fixed-term tenants stay through lease end. Month-to-month tenants require proper notice (3 months if over 1 year tenancy) OR you sell with them in place to a cash buyer who takes over as landlord.
No statewide right of first refusal. However, Boston has the Tenant Opportunity to Purchase Act (TOPA) — Boston landlords must notify tenants and provide an opportunity to purchase before selling to a third party. Consult a local attorney.
25% federal rate on all depreciation claimed during ownership (Section 1250 recapture). Massachusetts taxes this as ordinary income at 5% (long-term) or 8.5% (short-term). A 1031 exchange defers both depreciation recapture and capital gains indefinitely.
Yes — a 1031 like-kind exchange defers capital gains and depreciation recapture by reinvesting into a replacement property. Must use a Qualified Intermediary; 45 days to identify replacement, 180 days to close. A cash sale can be structured as a 1031.