What Is the Capital Gains Tax Rate in Massachusetts for Commercial Property?

By Casey DiMascio, Head of Broker Partnerships, CommercialGRP

One of the most common questions I hear from brokers and investors — especially when we’re preparing a property for sale — is: “What’s the capital gains tax rate in Massachusetts for commercial real estate?”

It’s a great question, and one every investor should understand before entering or exiting a deal. At CommercialGRP, we believe knowledge builds stronger partnerships — and clarity on numbers like these helps everyone make better, faster, and more confident decisions.

Understanding Capital Gains Tax in Massachusetts

When you sell a commercial property in Massachusetts, your capital gain is the profit from that sale — the difference between your selling price and your adjusted cost basis (what you paid for the property, plus improvements, minus depreciation).

Massachusetts treats that gain as income, meaning it’s subject to both:

  • Federal capital gains tax, and

  • State income tax (at a flat rate of 5% for most taxpayers).

So, for example:
 If you purchased an industrial property for $2,000,000, invested $300,000 in improvements, and sold it for $3,000,000, your gain would be roughly $700,000 after adjustments — with $35,000 due to Massachusetts in state tax (plus any applicable federal taxes).

It’s straightforward math, but getting ahead of it early can make a meaningful difference in your exit planning.

(For a deeper dive into state-specific exit planning, see Exit Strategies in Massachusetts CRE.)

How Timing and Structure Affect Your Tax Outcome

The tax rate is consistent, but your strategy can change how much you actually pay. A few examples:

  • 1031 Exchange: Reinvesting your proceeds into another like-kind property lets you defer both federal and state capital gains taxes, helping your capital continue working for you.

  • Entity Structuring: Holding property under a partnership, LLC, or trust can influence tax treatment and flexibility during exit.

  • Depreciation Recapture: Any depreciation taken during ownership is “recaptured” at sale, taxed separately — something investors should factor in early.

At CommercialGRP, we collaborate closely with brokers and investors to identify these considerations before a property hits the market. This proactive, detail-oriented approach reflects our commitment to making every transaction as efficient and transparent as possible.

Why Transparency Builds Better Deals

As someone who spends every day connecting with brokers, I’ve seen how clear communication and mutual trust make the difference between a good deal and a great partnership.

Our team values openness — about underwriting assumptions, timelines, and even challenges that may arise. We don’t just say we’re communicators; we act like it. When brokers know we’ll execute exactly as we say, confidence builds — and together, we get more deals done.

That’s how we live our core values every day:

  • Motivated & Committed: Always showing up prepared, responsive, and ready to move when opportunity strikes.

  • Outstanding Communicators: Keeping partners informed at every step — no surprises.

  • Self-Reliant & Detail-Oriented: Managing due diligence and deal execution with precision so our partners can focus on relationships.

Honesty and Integrity: Doing what’s right, even when no one’s watching — because long-term trust matters more than short-term wins.

Building Partnerships That Transform Communities

For us, understanding taxes and transaction details isn’t just about the numbers. It’s about using that insight to make smarter investments — in properties, people, and communities.

Every acquisition we pursue, whether a 15,000 SF industrial asset or a neighborhood retail center, supports our core focus: finding opportunities that not only perform but also transform. When we collaborate with brokers who share that vision, we don’t just close deals — we create meaningful, lasting impact.

Let’s Connect

If you’re a broker or investor working on a Massachusetts or New England property and want to collaborate with a team that values clarity, trust, and shared success, I’d love to connect.

Reach out to me or our acquisitions team at CommercialGRP — let’s explore how we can create value together, one property (and one community) at a time.