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Florida Capital Gains Tax: The Rules You NEED to Know

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Does Florida have capital gains tax? | Cost for your primary residence | Cost for additional properties | How to avoid Florida capital gains tax

Capital gains are the profits you earn from the sale of capital assets, such as stocks, bonds and real estate. Capital gains taxes are what you pay on those profits.

This tax is triggered only when an asset is sold, so you don’t have to worry about capital gains taxes as long as you own the property.

There is no Florida capital gains tax, but you still have to pay federal taxes if you sell a home in the state. The exact tax rate you’ll end up paying depends on several factors, including how long you owned the property and your income level.

You can also avoid paying federal gains taxes at all, as long as you follow IRS rules and meet the necessary conditions for your primary home or income property.

If you’re unsure of how to navigate capital gains taxes, we recommend speaking with a qualified real estate agent near you. A realtor will be able to help you choose the best time to sell your home, plus navigate paperwork and legal considerations along the way.

Our friends at Clever Real Estate make it easy to meet top-rated real estate agents in Florida and beyond. They offer a free service that matches you with several agents so you can shop around and find the best match.

Regardless of whether you end up having to pay capital gains taxes, Clever can help you save thousands when you sell, thanks to pre-negotiated listing fees of just 1.5%. In Florida, where the median home price is $378,000, you’d save thousands — just for finding an agent through Clever!

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Does Florida Have Capital Gains Tax?

No, there is no Florida capital gains tax. But if you live in Florida, you’ll be responsible for paying federal capital gains tax when you sell your house.

The tax rate you’ll pay depends on how long you’ve owned the property:

  • Less than 12 months: You’ll pay a higher short-term tax rate
  • More than 12 months: You’ll pay a lower long-term tax rate

In general, it’s best to own a home for at least two years so you can avoid capital gains taxes altogether.

👉 Jump To: How to AVOID Capital Gains Taxes

How Much is Florida’s Capital Gains Tax?

Because Florida doesn’t have a capital gains tax, the amount you pay depends on the federal tax rates.

This depends on several factors, including:

  • Your federal tax bracket
  • Your filing status (single or married filing jointly, etc.)
  • How long you’ve owned the house
  • Whether the home was your primary residence or investment property

Short-term capital gains are taxed differently than long-term capital gains. The difference is how long you owned the property — short-term ownership of a year or less taxes capital gains like regular income. If you’ve owned it for more than a year, your tax uses the more favorable long-term rate.

Capital Gains Tax on Your Primary Residence

The IRS has an ownership and use test to avoid capital gains taxes when selling your main house.

If the home you sell was in your name and was your primary residence for the two out of five years, you may not have to pay taxes on the full amount of your profits. It’s called the “2 out of 5 year rule.” It lets you exclude capital gains up to $250,000 (up to $500,000 if filing jointly).

Here’s an example of how much capital gains tax you might pay if you owned the house for more or less than 12 months:

Capital Gains Tax on Additional Property

Rentals, second homes and investment properties don’t have the same exemption as a primary residence. Before you sell, try to stretch ownership to at least 12 months to qualify for the lower tax rate.

Can You Avoid Capital Gains Tax in Florida?

Since Florida doesn’t have capital gains taxes, the rules default to the federal guidelines. According to the IRS, you can avoid capital gains tax in Florida under specific conditions. It depends on the property type and your tax filing status.

How to Avoid Florida Capital Gains Taxes on Your Primary Residence

You might qualify for an exemption of the real estate tax if you sell your Florida residence. The exemption applies if you pass what the IRS calls the “ownership and use test“:

  • You owned your home for two of the past five years
  • You used it as your primary residence for at least two of the past five years

The two-year period doesn’t have to be consecutive. If you meet that criteria, the IRS lets you exclude up to $250,000 of a capital gain from the sale of your home (up to $500,000 if you file a joint tax return with your spouse).

Filing Status Exclusion Amount
Single $250,000
Jointly with your spouse $500,000
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According to the IRS, the two years don’t have to be consecutive. There’s an additional benefit for veterans or military members. If you or your spouse are on official leave, you can suspend the five-year test for up to ten years.

You can also qualify for a partial exclusion under specific conditions. You might be eligible for a partial exclusion if you’re selling your home for certain reasons:

  • Change in workplace location
  • Health issue
  • Unforeseeable event

The IRS determines a partial exclusion according to how long you owned and lived in the house and whether you recently excluded capital gains for the sale of a different home.

How to Avoid Florida Capital Gains Taxes on Rental or Additional Property

Getting out of paying capital gains taxes on a rental or other property is tricky. However, you have three possibilities:

  • Make it your primary residence for two of the five years before the sale to qualify for the IRS exclusion.
  • Buy another piece of similar property to trigger the 1031 exchange and not pay any capital gains taxes now.
  • Invest in property in a distressed area to defer capital gains taxes under the Opportunity Zone tax incentive created by the Tax Cuts and Jobs Act.

Next Steps for Florida Home Sellers

Navigating capital gains taxes can be challenging for sellers who are unfamiliar with the the process — but a qualified real estate agent can help you through the legal and financial hurdles.

A realtor will be able to help you evaluate your situation to know whether you can avoid federal capital gains taxes in Florida, plus what to do if the home you’re selling isn’t your primary residence. Some realtors may also be able to recommend a finance professional to help you crunch the numbers for your specific situation.

Before you buy or sell your next home, we recommend connecting with our friends at Clever Real Estate. They offer a network of pre-vetted real estate agents from Florida’s best brokerages, including Keller Williams, RE/MAX, Century21, and more.

Best of all, Clever’s pre-negotiated rates can help you save thousands. You’ll pay just 1.5% in listing fees, and Florida buyers are eligible for cash back after closing!

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Does Florida have capital gains tax?

There’s no Florida capital gains tax — but if you’re selling a home in Florida, you’ll be responsible for paying federal capital gains tax. The amount you’ll pay depends on numerous factors, including how long you’ve owned the home. Learn how federal capital gains tax is calculated.

How can I avoid capital gains tax when selling a house?

According to the IRS, you can avoid capital gains tax in Florida under specific conditions — but it depends on the property type and your tax filing status. For example, if you’re selling a primary residence where you’ve lived for two of the past five years, you can likely avoid this tax. Military service or certain extenuating circumstances, such as health problems, may also allow you to qualify for exclusion as well. Learn whether you can avoid capital gains tax.

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