The tax implications of a second home in Florida start with what you don’t get: the state’s homestead exemption and the Save Our Homes assessment cap both apply only to a primary residence, so a vacation or seasonal property is taxed on its full value and can be reassessed much faster each year. On top of that, buying triggers one-time state transfer taxes, renting the home to short-term guests brings Florida hospitality taxes into the picture, selling exposes the full gain to federal capital gains tax, and dying while owning it can force a second probate in Florida courts. Florida has no state income tax, which is real, but the headline hides most of the story.
Property Tax Without a Homestead Exemption
Florida’s homestead exemption under Statute 196.031 can knock up to $50,000 off the taxable value of a permanent residence.1Florida Legislature. Florida Code 196.031 – Exemption of Homesteads A second home doesn’t qualify. On a $500,000 property, that alone means roughly $50,000 more in taxable value than an identical home claimed as a homestead down the street.
The larger long-term cost is how fast the assessed value can climb. Primary residences are protected by the Save Our Homes cap, which limits annual assessment increases to 3% or the change in the Consumer Price Index, whichever is lower.2Florida Legislature. Florida Code 193.155 – Homestead Assessments Non-homestead residential property gets a much looser leash. Under Statute 193.1554, assessed value can jump up to 10% per year.3Florida Legislature. Florida Code 193.1554 – Assessment of Nonhomestead Residential Property In a fast-appreciating market, the tax base on a second home can grow more than three times faster than it would on a homestead down the block.
The 10% cap also resets when the property changes hands. The county property appraiser reassesses at full market value in the year following a sale, wiping out any accumulated benefit from prior caps.4Palm Beach County Property Appraiser. Assessment Caps If you’re buying, budget for property tax based on the purchase price, not the seller’s most recent bill.
One-Time Taxes at Closing
Beyond property tax, the purchase itself triggers several state transaction taxes. The documentary stamp tax on the deed is the largest. Outside Miami-Dade County, this transfer tax runs $0.70 per $100 of the purchase price.5Florida Department of Revenue. Documentary Stamp Tax On a $500,000 home, that’s $3,500. Miami-Dade charges $0.60 per $100 on single-family residences.6Florida Department of Revenue. Documentary Stamp Tax
If you finance, the loan carries its own documentary stamp tax of $0.35 per $100 of the mortgage amount.7Florida Legislature. Florida Code 201.08 – Tax on Promissory or Nonnegotiable Notes Florida also charges a one-time intangible tax of 2 mills ($0.002 per dollar) on the mortgage.8Florida Legislature. Florida Code 199.133 – Levy of Nonrecurring Tax On a $400,000 mortgage, that’s $1,400 in note stamps and $800 in intangible tax. Add the deed stamps and a financed $500,000 purchase generates roughly $5,700 in state taxes at closing, before recording fees and title insurance.
Federal Deductions You Can Still Take
The IRS treats a second home much like a primary residence for mortgage interest purposes. You can deduct the interest as long as combined mortgage debt across both homes doesn’t exceed $750,000, a limit made permanent under legislation signed in 2025.9Office of the Law Revision Counsel. 26 USC 163 – Interest If you carry $400,000 on your primary home and take out $350,000 in Florida, the full interest on both loans qualifies. Push the combined balance past $750,000 and only the interest on the first $750,000 is deductible. The deduction requires itemizing.
Florida property taxes count toward the federal state and local tax deduction. Starting in 2025, the SALT cap rose to $40,000 for most filers ($20,000 for married filing separately), up from $10,000. The deduction phases down for taxpayers with modified adjusted gross income above $500,000 ($250,000 if married filing separately).10Internal Revenue Service. How to Update Withholding to Account for Tax Law Changes for 2025 The higher cap gives second-home owners more room, but property taxes on two homes plus any income tax from your home state can still bump against it.
Taxes If You Rent It Out
Florida Transient Rental and Tourist Development Taxes
Renting to short-term guests puts you in the hospitality business as far as Florida is concerned. Any rental of six months or less triggers the state’s 6% transient rental tax on total rent collected.11Florida Legislature. Florida Code 212.03 – Transient Rentals Tax Counties add their own tourist development tax, often called a bed tax or resort tax, at rates from 3% to 6% depending on the county.12Florida Department of Revenue. Local Option Taxes In counties at the top of that range, guests pay a 12% tax surcharge on top of your rate, and you are responsible for collecting and remitting it.
Rentals under a written lease for continuous residence longer than six months are exempt from both taxes.11Florida Legislature. Florida Code 212.03 – Transient Rentals Tax The line is sharp: a five-month vacation rental is fully taxable, a seven-month lease is exempt. Owners who rent through Airbnb or VRBO remain personally responsible even when the platform handles some remittance. Register with the Florida Department of Revenue and get a sales tax certificate before collecting your first payment.
The Federal 14-Day Rule
Federal law offers a real break for occasional renters. Under 26 USC 280A(g), if you use the property as a residence and rent it for fewer than 15 days during the year, the rental income is completely excluded from gross income. You don’t report it and you don’t pay tax on it.13Office of the Law Revision Counsel. 26 USC 280A – Disallowance of Certain Expenses in Connection With Business Use of Home The tradeoff: you also can’t deduct expenses tied to those rental days. In high-demand markets during peak events, this rule can put meaningful cash in your pocket tax-free.
Cross 14 days and the whole year’s rental income becomes reportable on Schedule E. Deductible expenses like insurance, maintenance, utilities, and management fees get allocated between rental and personal use based on the ratio of rental days to total days of use.
Depreciation and Recapture
When you rent the home, the IRS lets you depreciate the building (not the land) over 27.5 years using MACRS.14Internal Revenue Service. Publication 527 – Residential Rental Property Buy at $500,000 with land worth $100,000, and you depreciate the $400,000 structure at roughly $14,545 per year. Depreciation often creates a paper loss even when the property throws off positive cash.
Here’s the catch at sale time. Every dollar you claimed gets recaptured, taxed at up to 25%, which is higher than long-term capital gains rates. If you never bothered to claim depreciation, the IRS still calculates recapture based on what you were allowed to take. Skipping the deduction doesn’t save you from the tax.
Capital Gains When You Sell
This is where second-home ownership gets expensive in a way many buyers don’t see coming. Selling a primary residence lets you exclude up to $250,000 in gain ($500,000 married filing jointly) if you owned and lived in the home for at least two of the previous five years.15Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence A second home doesn’t qualify. Every dollar of profit is taxable.
Federal long-term capital gains rates for 2026 depend on taxable income: 0%, 15%, or 20%. Single filers hit the 15% bracket at $49,450 and the 20% bracket at $545,500. Married couples filing jointly hit 15% at $98,900 and 20% at $613,700. Higher earners face an additional 3.8% net investment income tax when modified adjusted gross income exceeds $250,000 married filing jointly or $200,000 single.16Internal Revenue Service. Net Investment Income Tax A high-bracket couple selling a Florida second home with $300,000 of appreciation can easily face $70,000 or more in combined federal tax, and depreciation recapture stacks on top of that.
Some owners try to convert the property to a rental and then use a 1031 like-kind exchange to defer the gain into a replacement investment property. Property used primarily for personal purposes doesn’t qualify.17Internal Revenue Service. Like-Kind Exchanges Under IRC Section 1031 A genuine conversion for a meaningful period is required, not a rental listing the month before closing. The IRS scrutinizes these conversions, and getting it wrong makes the entire gain taxable immediately.
Estate Planning and Ancillary Probate
Florida has no state estate or inheritance tax, so the state won’t take a cut when a second-home owner dies. The federal estate tax exemption for 2026 is $15,000,000 per individual, with a 40% rate above that threshold.18Internal Revenue Service. Estate Tax Most owners won’t owe federal estate tax, but a different problem hits estates of every size.
If you live in another state and own Florida real property at death, your estate faces ancillary probate: a separate court proceeding in Florida on top of whatever your home state requires. Florida Statute 734.102 authorizes this secondary administration for non-resident decedents who owned Florida assets.19Florida Legislature. Florida Code Chapter 734 – Estates of Nonresidents Ancillary probate adds legal costs, delays the transfer to heirs, and opens a window for creditor claims in Florida.
The common ways to avoid it are holding the property in a revocable living trust, or titling it as joint tenants with right of survivorship or tenants by the entirety for married couples, so it passes directly to the surviving owner. Sorting out ownership structure before a health event is far cheaper than dealing with dual-state probate after.
Extra Rule for Foreign Owners
If you are not a U.S. citizen or resident, one more federal tax layer applies. Under the Foreign Investment in Real Property Tax Act, when a foreign person sells U.S. real property, the buyer must withhold 15% of the sale price and remit it to the IRS.20Internal Revenue Service. FIRPTA Withholding On a $500,000 sale, that’s $75,000 held at closing regardless of actual tax owed. The seller files a U.S. tax return to claim a refund of any excess, which takes months.
An exemption applies when the buyer is an individual who will use the property as a residence and the sale price is $300,000 or less. The buyer or a family member must intend to live in it for at least half the days it’s used during each of the first two years.21Internal Revenue Service. Exceptions From FIRPTA Withholding Most Florida second homes exceed $300,000, so foreign sellers should plan for the withholding and the paperwork of recovering any overpayment.