2023 Massachusetts General Laws › Part I - Administration of the Government › Title IX - Taxation › Chapter 65c - Massachusetts Estate Tax › Section 5 - Valuation; Gross Estate

Section 5. (a) Property in the Massachusetts gross estate shall be valued as of the date of death of the decedent; provided, however, that if an alternate valuation has been properly elected for purposes of the federal estate tax in accordance with section two thousand and thirty-two of the Code in effect on January first, nineteen hundred and eighty-five the property in the Massachusetts gross estate shall be valued as of the dates used for federal estate tax valuation purposes; and provided, further, that if no federal estate tax is payable under federal estate tax laws applicable to the decedent's estate, whether or not a federal estate tax return is required to be filed, the executor may elect to value the property in the Massachusetts gross estate on the alternate valuation dates and in the manner provided under the provisions of section two thousand and thirty-two of said Code on the Massachusetts estate tax return.
(b) The value of an annuity, a life estate or an interest in property less than an absolute interest shall be determined in accordance with the actuarial tables in effect as of the decedent's death under section two thousand and thirty-one of the Code in effect on January first, nineteen hundred and eighty-five at such time and regulations issued thereunder.
(c) If the gross estate of a decedent dying on or before December 31, 2018 includes real property devoted to use as a farm for farming purposes, the estate may elect to value such property in accordance with section 2032A of the Code in effect on January 1, 1985. If a federal return is required to be filed, such election shall be consistent with the election made for federal estate tax purposes. All substantive and procedural provisions of said section 2032A shall, insofar as pertinent and consistent, apply to such election. The commissioner shall promulgate regulations to carry out this subsection.
(d)(1) As used in this subsection, the following words shall have the following meanings unless the context clearly requires otherwise:
''Applicable date'', the date upon which the 10–year period that the estate shall be liable for assessment under paragraph (4) begins; provided, however, that for qualifying agricultural and associated land, the applicable date shall be the date of death of the decedent; and provided further, that for qualifying noncommitted land, the applicable date shall be 2 years from the date of death of the decedent.
''Associated land'', land under the same ownership as and contiguous to qualifying agricultural land and which, as of the date of death of the decedent, is not committed to residential, industrial or commercial use; provided, however, that land shall be deemed contiguous if it is separated from other land under the same ownership only by a public or private way or waterway; provided further, that land under the same ownership shall be deemed contiguous if it is connected to other land under the same ownership by an easement for water supply; and provided further, that any such land in excess of 100 per cent of the acreage of qualifying agricultural land shall be deemed qualifying noncommitted land.
''Closely-held agricultural land'', qualifying agricultural and associated land and qualifying noncommitted land for which an election is made under this subsection.
''Qualifying agricultural land'', land which meets the definition of forest land under chapter 61, land actively devoted to agricultural, horticultural or agricultural and horticultural uses under chapter 61A and recreational land under chapter 61B that is also used for farming or agriculture as defined in section 1A of chapter 128 and has been devoted to any such use for not less than 2 of the tax years immediately preceding the death of the decedent; provided, however, that the land need not be classified by municipal assessors as forest land under chapter 61, land actively devoted to agricultural or horticultural or agricultural and horticultural uses under said chapter 61A or recreational land under said chapter 61B to qualify for valuation as closely-held agricultural land under this subsection.
''Qualifying noncommitted land'', land that is not qualifying agricultural land and is not committed to residential, industrial or commercial use, including associated land in excess of 100 per cent of the acreage of qualifying agricultural land.
''Savings'', the difference between the estate taxes paid as a result of an election made under this subsection and the estate taxes that would have otherwise been paid had the election not been made.
(2) If the gross estate of a decedent dying on or after January 1, 2019 includes real property that is qualifying agricultural land, associated land or qualifying noncommitted land, the estate may elect to value such property, or any portion thereof, as closely-held agricultural land pursuant to the valuation set by the farmland valuation advisory commission established in section 11 of chapter 61A for the fiscal year of the most recent growing season. The value of closely-held agricultural land as determined pursuant to such election shall only be for the purpose of computing the tax due under this chapter. Such election shall be subject to paragraphs (3) to (6), inclusve.
(3) Unless the property is restricted by a nondevelopment covenant that: (i) is approved by the commissioner of agriculture; (ii) is for the purposes of maintaining the land in agricultural use; (iii) precludes non-agricultural development of the land; (iv) is recorded at the registry of deeds in the counties or districts in which the property is located; and (v) does not expire within 10 years of the applicable date, the commissioner shall forthwith cause to be recorded in the registry of deeds of the counties or districts in which the property is situated a statement which shall constitute a lien upon the land covered by election under this subsection. The statement shall include any owners of record, the savings as a result of such election, the fair market value of the property and a description of the land adequate for identification. Unless such a statement is recorded, the lien shall not be effective with respect to a bona fide purchaser or other transferee without actual knowledge of the lien. Upon application by a record owner, any such lien shall be released by the commissioner with respect to that property upon the facts being established by record or by affidavit or otherwise that all assessments have been paid or unless it is more than 10 years past the applicable date and no assessment is due. All recording fees paid under this subsection, whether for statements of liens, certificates, releases or otherwise, shall be borne by the owner of record of the land.
Property restricted by an agricultural preservation restriction as defined in section 31 of chapter 184 that is signed by the commissioner of agriculture shall be deemed to be restricted by a nondevelopment covenant if the restriction: (i) is approved by the commissioner of agriculture; (ii) is for the purposes of maintaining the land in agricultural use; (iii) precludes non-agricultural development of the land; (iv) is recorded at the registry of deeds in the counties or districts in which the property is located; and (v) does not expire within 10 years of the applicable date.
(4)(i) When land valued as closely-held agricultural land under this subsection within a period of 10 years from the applicable date is sold for other use or no longer qualifies as closely-held agricultural land, any owners shall immediately notify the commissioner of such sale or change of use and an assessment shall be due to the commonwealth. Such assessment shall be calculated with interest based on the date of sale for other use or based on the last date of use as closely-held agricultural land as specified in this paragraph.
The assessment shall be equal to 100 per cent of the savings if such date is not more than 1 year after the applicable date; 90 per cent of the savings if such date is more than 1 year but not more than 2 years after the applicable date; 80 per cent of the savings if such date is more than 2 years but not more than 3 years after the applicable date; 70 per cent of the savings if such date is more than 3 years but not more than 4 years after the applicable date; 60 per cent of the savings if such date is more than 4 years but not more than 5 years after the applicable date; 50 per cent of the savings if such date is more than 5 years but not more than 6 years after the applicable date; 40 per cent of the savings if such date is more than 6 years but not more than 7 years after the applicable date; 30 per cent of the savings if such date is more than 7 years but not more than 8 years after the applicable date; 20 per cent of the savings if such date is more than 8 years but not more than 9 years after the applicable date; 10 per cent of the savings if such date is more than 9 years but not more than 10 years after the applicable date. No assessment shall be due if such date is more than 10 years from the applicable date.
Such assessment shall also include interest calculated at a simple interest rate of 5 per cent per annum on the savings from the applicable date.
There shall be an additional assessment equal to 30 per cent of the savings if the date of sale for other use or the last date of use while qualified as closely-held agricultural land occurs not more than 1 year of the applicable date and 15 per cent of the savings if such date occurs more than 1 year but not more than 2 years after the applicable date.
(ii) If an election has been made with respect to: (A) qualifying non-committed land which, on the applicable date, fails to meet the definition of forest land under chapter 61; (B) land actively devoted to agricultural or horticultural or agricultural and horticultural uses under chapter 61A; or (C) recreational land under chapter 61B that is also used for farming or agriculture as defined in section 1A of chapter 128, an assessment shall be due to the commonwealth and payable by the owners not more than 30 days of the applicable date; provided, however, that the land need not be classified by municipal assessors as forest land under said chapter 61, land actively devoted to agricultural or horticultural or agricultural and horticultural uses under said chapter 61A or recreational land under said chapter 61B. Such assessment shall be equal to the sum of: (I) 100 per cent of the savings; (II) interest calculated at a simple interest rate of 5 per cent per annum on the savings from the date of death of the decedent; and (III) an additional assessment equal to 30 per cent of the savings.
(iii) Notwithstanding this paragraph, there shall be no assessment if the land involved, or a lesser interest in the land involved, is acquired for a natural resource by the commonwealth or by a nonprofit conservation organization; provided, however, that if any portion of the land is sold or converted to commercial, residential or industrial use not more than 10 years after the applicable date by a nonprofit conservation organization, an assessment shall be imposed against the nonprofit conservation organization in the amount that would have been imposed at the time of acquisition of the subject parcel by the nonprofit conservation organization had the transaction been subject to an assessment or, in the case of qualifying non-committed land acquired by a nonprofit conservation organization before the applicable date, the amount that would have been imposed on the applicable date under subparagraph (ii).
(iv) In the case of sale for other use of closely-held agricultural land, other than qualifying noncommitted land sold for other use before the applicable date, assessments imposed by this subsection shall be due and payable by the grantor at the time of transfer of the property by deed or other instrument of conveyance. In the case of qualifying non-committed land sold for other use before the applicable date, assessments imposed by this subsection shall be due and payable by the grantor on the applicable date. In the case of change to a non-qualifying use, assessments imposed by this subsection shall be due and payable by the owners not more than 30 days after the last date of use as closely-held agricultural land, regardless of the date on which the commissioner was notified by the owners of such change of use.
(v) An assessment shall only be imposed under this subsection on that portion of the land on which the use has changed. If, by conveyance or other action of the owner thereof, a portion of land which is valued as closely-held agricultural land under this subsection is separated for other use, the land so separated shall be subject to liability for assessment, interest and additional assessment under this paragraph based on the proportion that the acreage of the land so separated bears to the total acreage of the land valued as closely-held agricultural land under this subsection.
(5) All buildings located on land which is valued as closely-held agricultural land under this subsection and all land occupied by a dwelling or regularly used for family living shall not be valued as provided in this subsection.
(6) The commissioner shall promulgate regulations to carry out this subsection.