Seller net proceeds: from the sale price to what you receive

The basic calculation

The price in your purchase and sale agreement is not the amount that reaches your account. Before closing, the closing attorney or settlement agent prepares a statement listing every charge and credit on your side of the sale. Read it in this order: the sale price, minus the payoff of any mortgage or other lien, minus transaction expenses, minus any credit to the buyer, plus or minus adjustments for taxes and other items shared by date. Each line should match a document: the contract, a payoff letter, a fee agreement or a bill.

When the buyer finances the purchase with a covered mortgage loan, federal rules require the settlement agent to give you a disclosure of your side of the transaction no later than the day of closing. Asking your attorney for a draft a few days earlier gives you time to check it line by line.

A worked example

The figures below are one set of assumptions, used only to show how the lines fit together. The expense figure is an assumed total, not a commission quote, tax rate or market standard, and the example leaves out date-based adjustments, which can add to or subtract from the result.

• Sale price: $1,000,000
• Mortgage payoff: minus $350,000
• Transaction expenses (assumed total): minus $45,000
• Credit to the buyer: minus $10,000
• Balance before tax review: $595,000

Credits and comparing offers

A credit to the buyer is a line on the settlement statement. It lowers the cash you receive, while the price in the contract stays the same. The buyer's loan program limits how much a seller may credit and what the money can be used for, so the buyer's lender confirms the amount.

Credits matter when you compare offers. In a hypothetical, offer A is $900,000 with a $15,000 credit and offer B is $890,000 with a $3,000 credit. After the credit alone, A comes to $885,000 and B to $887,000. That is not net proceeds: you would still compare the other costs, the financing, the contingencies and the timing of each offer.

Mortgage payoff

Your monthly statement shows a balance as of its date. The payoff amount is what it takes to satisfy the loan completely: it includes interest through the day the loan is paid off, and it may include fees charged but not yet paid, or a prepayment penalty if your loan has one. For a loan secured by a dwelling, the servicer must provide an accurate payoff statement as of a specified date when one is requested. Your closing attorney normally requests it.

A home equity line or any other lien on the property is also paid off at closing, from the same proceeds. If your mortgage has an escrow account for taxes or insurance, ask your servicer how and when any remaining balance will be returned after the loan is paid off.

Transaction expenses

Typical seller expenses in a Massachusetts sale include the state deed excise, which is paid by the party who signs the deed; your attorney's fee; broker compensation under your listing agreement; and fees for recording documents such as your mortgage discharge at the Registry of Deeds. Sellers usually also need a smoke and carbon monoxide compliance certificate from the local fire department.

Check each line against what you signed: the listing agreement, your attorney's engagement letter, and any invoices for repairs you agreed to pay at closing.

Adjustments by date

Some charges cover a period that straddles the closing date, so the contract divides them between buyer and seller. Common adjustments in a Massachusetts P&S include real estate taxes, water and sewer use charges, rents, and operating expenses such as condominium charges where they apply. Whether a bill has been paid ahead or is still due decides whether the line is a credit to you or a charge to you.

Real estate taxes that are not yet known at closing, or that are later abated, are handled under the contract's terms for unassessed and abated taxes. Ask your attorney which items your contract adjusts and how.

If the property is rented, tenants' security deposits and the interest owed on them belong to the tenants. Massachusetts law sets duties for transferring the deposits and related records when the property is sold, and both the old and new owners have responsibilities. That money is not part of your proceeds, and the rent adjustment is a separate line.

Taxes and withholding

The amount on the settlement statement is cash at closing, not taxable gain. Whether you owe tax, and how much, depends on federal and state rules, what you paid for the home, the cost of capital improvements and any exclusions you qualify for. Keep the signed settlement statement and your improvement records for your tax adviser.

For Massachusetts closings on or after November 1, 2025 with a gross sales price of $1,000,000 or more, the party handling the closing, usually the closing attorney or title company, must file Form NRW with the Department of Revenue within 10 days of closing, even when nothing is withheld. Each seller completes a Transferor's Certification and gives it to that party on or before closing. If the seller is a nonresident, or a business with no continuing Massachusetts presence, tax may be withheld from the proceeds. Under the Department's guidance, if a seller does not provide the signed certification by closing, the withholding agent must withhold based on the gross sales price.

Federal rules are separate. When the seller is a foreign person for tax purposes, the buyer or settlement agent may have to withhold tax under FIRPTA, and a P&S commonly asks the seller for a certificate of non-foreign status. Exceptions and reduced withholding have their own procedures, so raise the question with your attorney and tax adviser early, before the closing date is set.