How Much Is Capital Gains Tax on Real Estate in Florida?

Florida does not impose a state capital gains tax on real estate, so the only capital gains tax on real estate in Florida is federal. If you owned the property more than a year, the federal rate is 0%, 15%, or 20% depending on your taxable income, with a possible 3.8% surtax on higher earners and a 25% cap on any portion tied to depreciation. If you owned it a year or less, the gain is taxed at ordinary income rates that reach as high as 37%. A primary residence exclusion of up to $250,000 for single filers and $500,000 for married couples wipes out federal tax entirely for many home sales.¹

Why Florida Itself Takes Nothing

Article VII, Section 5 of the Florida Constitution bars any state levy on the income of natural persons, which rules out a state capital gains tax on individuals.² The state does collect a documentary stamp tax when property changes hands, generally $0.70 per $100 of the sale price, with a different structure in Miami-Dade.³ That is a transfer tax on the transaction, not a tax on your profit, and it does not change your capital gains math. Your entire capital gains liability lives on the federal return.

How the Gain Is Calculated

Your taxable gain is the amount realized minus your adjusted basis.

The amount realized is the sale price reduced by selling expenses directly tied to the sale, such as real estate commissions, advertising, legal fees, and any mortgage points or loan charges you paid on the buyer’s behalf. Escrow deposits for future property taxes or insurance don’t count as selling expenses.⁴

Your adjusted basis starts with what you paid for the property, including closing costs at purchase. Add capital improvements that increase value, extend useful life, or adapt the property to a new use. A new roof, a kitchen remodel, or rewired electrical qualifies; routine repainting or drywall patching does not. Subtract any depreciation you claimed or were entitled to claim.⁴

The paperwork matters. Keep closing statements, improvement receipts, and contractor invoices for as long as you own the property and at least three years after filing the return that reports the sale. Without records, you cannot prove a higher basis, and you’ll pay tax on a larger gain than you actually earned.

Rates by Holding Period

Federal law draws a hard line at one year. Property held more than a year produces a long-term gain; property held a year or less produces a short-term gain.⁵

Short-Term: Ordinary Income Rates

A short-term gain gets no preferential treatment. The profit stacks on your other income and is taxed at your ordinary rate, which for 2026 tops out at 37% for single filers with taxable income above $640,600, or $768,700 for married couples filing jointly.⁶ Buy a Florida condo and sell it eight months later, and the profit is taxed like a paycheck.

Long-Term: 0%, 15%, or 20%

Hold the property more than a year and the preferential long-term rates apply.⁷ For 2026, single filers pay 0% up to $49,450 of taxable income, 15% up to $545,500, and 20% above that; married couples filing jointly pay 0% up to $98,900, 15% up to $613,700, and 20% above.⁶ Most sellers land at 15%. Selling one day before the one-year mark instead of one day after can be the difference between a 37% rate and a 15% rate on the same profit.

The 3.8% Net Investment Income Tax

Higher-income sellers owe an extra 3.8% on top of the standard rates. The Net Investment Income Tax applies when modified adjusted gross income exceeds $200,000 for single filers, $250,000 for married couples filing jointly, or $125,000 for married filing separately. It’s calculated on the lesser of your net investment income or the amount your income exceeds the threshold, and capital gains from real estate, including rental property and second homes, count as investment income.⁸ These thresholds aren’t indexed for inflation, so they pull in more taxpayers each year.⁹

One important carve-out: gain excluded under the Section 121 primary residence exclusion is also excluded from the NIIT.⁹

The Primary Residence Exclusion

The single most valuable break for Florida homeowners is Section 121. A single filer can exclude up to $250,000 of capital gain from the sale of a principal residence; a married couple filing jointly can exclude up to $500,000.¹ A single homeowner with a $200,000 gain on a Florida home owes zero federal capital gains tax.

To qualify for the full exclusion, you must have owned the home and used it as your principal residence for at least two of the five years before the sale. The two years don’t need to be consecutive, and short absences like vacations still count as time in the home. Time in a licensed care facility can count toward the use test if you lived in the home at least one year of the five-year lookback.⁴ For married couples claiming the full $500,000, only one spouse needs to meet the ownership test, but both must independently meet the use test.¹ The exclusion is generally available only once every two years.

A partial exclusion is available if you sold before hitting two years because of a change in employment, health issues, or unforeseen circumstances. The available amount is proportional to the time you did live there.

One wrinkle for anyone who claimed a home office: depreciation deductions taken after May 6, 1997, don’t get the exclusion. That portion of the gain is taxed at the 25% depreciation recapture rate, even when the rest qualifies for Section 121.

Investment Property and Depreciation Recapture

Rentals, commercial buildings, and other investment real estate don’t qualify for the Section 121 exclusion, and they carry an extra layer many sellers overlook. During ownership you depreciate the building on your tax returns, lowering your taxable rental income each year. At sale, every dollar of depreciation you claimed reduced your basis, so it now increases your gain. The IRS taxes that depreciation-related portion of the gain at up to 25%, separate from the standard long-term rate.⁷

An example: you sell a rental for a $300,000 gain, and $50,000 of it traces back to depreciation. The $50,000 is taxed at up to 25%. The remaining $250,000 is taxed at your applicable long-term rate, most likely 15%. If your income triggers the 3.8% NIIT, that stacks on top of both portions.

Ways to Defer or Spread the Tax

1031 Exchange

A 1031 exchange lets you sell one investment property and roll the proceeds into another without recognizing the gain immediately. The tax is deferred, not eliminated: it survives in the replacement property’s lower basis and comes due when you eventually sell without another exchange. Both properties must be held for business use or investment, not personal use.¹⁰

The like-kind requirement is broad for real estate. Raw land can be swapped for an apartment building, a warehouse for a single-family rental. A personally used vacation home generally doesn’t qualify unless it meets strict rental standards, and property held primarily for sale (a flip) is excluded.¹⁰

Deadlines are unforgiving. You must identify potential replacements within 45 days of selling the original and close within 180 days, or by your tax return due date including extensions if that’s earlier. A qualified intermediary must hold the funds throughout; touching the proceeds yourself blows up the exchange, and so does missing either deadline.¹⁰

Installment Sale

If the buyer pays you over multiple years, you can report the gain proportionally as payments come in. Spreading the income can keep you in a lower bracket and reduce total liability. The installment method applies automatically when at least one payment arrives after the year of sale, though you can elect out. It’s unavailable for losses and for property held primarily for sale to customers (a developer selling subdivision lots, for instance). If the buyer places the full purchase price in an irrevocable escrow, the IRS treats it as fully received at sale, which eliminates the benefit.¹¹

Opportunity Zones

Investors who reinvested capital gains into a Qualified Opportunity Fund can defer the tax on those gains, but the deferral is ending. Any remaining deferred gain must be recognized no later than December 31, 2026, whether or not the investor has sold the fund interest by then.¹²

Inherited Property and Stepped-Up Basis

If you inherited Florida real estate, your basis is the fair market value on the date of the prior owner’s death, not what they originally paid.¹³ If your parent bought a house in 1985 for $80,000 and it was worth $400,000 at their death, your basis is $400,000. Sell for $420,000 and your gain is $20,000, not $340,000. The rule applies whether or not the estate files a federal estate tax return.¹⁴ Move into the inherited home and meet the two-of-five-year test, and you can layer the Section 121 exclusion on top of the stepped-up basis.

Foreign Sellers: FIRPTA Withholding

Foreign nationals selling Florida real estate face withholding at closing that domestic sellers don’t. Under FIRPTA, the buyer must withhold 15% of the total sale price and remit it to the IRS. This is a prepayment against the seller’s eventual tax, not an added tax, and a return can recover any excess.¹⁵ A narrow exception waives withholding when the buyer is an individual acquiring the property as a personal residence at a price of $300,000 or less, with definite plans to live there at least half the days it’s in use during each of the first two years.¹⁶ Florida sees these transactions more often than most states.

Reporting the Sale

You still report the transaction even if the gain is fully excluded under Section 121 or deferred through a 1031 exchange. Real estate sales go on Form 8949, with the totals flowing to Schedule D of Form 1040.¹⁷ Depreciation recapture on investment property is reported on Form 4797, installment sales on Form 6252, and the 3.8% NIIT on Form 8960.⁸ Filling out the right forms matters less than getting the numbers right. Basis and holding period are where costly mistakes happen.

1
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
2
Online Sunshine. Florida Statutes Chapter 220
3
Florida Department of Revenue. Documentary Stamp Tax
4
Internal Revenue Service. Publication 523 – Selling Your Home
5
Office of the Law Revision Counsel. 26 U.S. Code 1222 – Other Terms Relating to Capital Gains and Losses
6
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
7
Office of the Law Revision Counsel. 26 USC 1(h) – Tax Imposed
8
Internal Revenue Service. Net Investment Income Tax
9
Internal Revenue Service. Questions and Answers on the Net Investment Income Tax
10
Office of the Law Revision Counsel. 26 U.S. Code 1031 – Exchange of Real Property Held for Productive Use or Investment
11
Internal Revenue Service. Publication 537 – Installment Sales
12
Internal Revenue Service. Opportunity Zones Frequently Asked Questions
13
Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent
14
Internal Revenue Service. Gifts and Inheritances
15
Internal Revenue Service. FIRPTA Withholding
16
Internal Revenue Service. Exceptions From FIRPTA Withholding
17
Internal Revenue Service. Instructions for Form 8949