Other Exceptions to Withholding Requirements

(a) General . Withholding may be reduced below the amount required by 830 CMR 62B.2.4(3) or not required at all if the Transferor certifies, at or before Closing, on a Transferor’s Certification that withholding is reduced or not required under 830 CMR 62B.2.4(5). The Transferor’s Certification must include a statement of the reason or reasons why withholding is reduced or not required.

Payment of Debts . If the withholding amount required by 830 CMR 62B.2.4(3) is greater than the amount by which the Gross Sales Price exceeds amounts used for the payment of debts of the Transferor, secured by a mortgage or other lien on the property being transferred that are paid at Closing, then the Withholding Agent shall withhold the amount by which the Gross Sales Price exceeds amounts used for the payment of debts of the Transferor that are paid at Closing. For purposes of 830 CMR 62B.2.4(5)(a)(1), debts do not include those incurred in contemplation of the Transfer, including a debt secured by a mortgage, deed, or trust, or other instrument on the property being sold with an effective date of not more than 90 days before the date of Transfer.

Foreclosure. Withholding is not required on a foreclosure sale when the Gross Sales Price does not exceed the debt secured by the property held by a mortgagee or lienholder. If the Gross Sales Price exceeds the secured debt, the amount of tax withheld pursuant to 830 CMR 62B.2.4(5)(a)(2) shall be the lesser of the surplus over the secured debt or the amount otherwise required to be withheld under 830 CMR 62B.2.4(3). When a mortgagor conveys the mortgaged property to a mortgagee in lieu of foreclosure and with no additional consideration, the mortgagee is not required to withhold tax. Withholding is not required by a subsequent third party bona fide purchaser on such Transfer by the mortgagee or assignee or holder of debt or other obligation if all proceeds go directly to the mortgagee or lien holder.

Involuntary Transfer. Withholding is not required on Transfers with respect to which gain is realized but not recognized in Massachusetts because the Massachusetts Real Estate has been compulsorily or involuntarily converted, within the meaning of Code § 1033.

Property Only Partly Located in Massachusetts . If the real property being transferred is located partly within and partly outside of Massachusetts, then withholding is required only on the portion of the Gross Sales Price reasonably attributable to the portion of the real property located within Massachusetts.

Nonrecognition Provisions . Withholding is not required with respect to certain Transfers that qualify for nonrecognition of taxable gain under M.G.L. c. 62 or M.G.L. c, 63. Withholding is not required to the extent of any gain not recognized under Massachusetts law in the following instances:

a. a Transfer of a principal residence as defined under Code § 121; b. a Transfer between spouses or incident to a divorce, as defined under Code § 1041; c. a Transfer that qualifies for nonrecognition under Code § 351; or d. a Transfer that qualifies as a tax-free reorganization as defined under Code § 368.