Florida capital gains tax: what real estate investors actually pay
Written by Jay Beach, SVP, Investor Portfolio Lending · Reviewed by the Mortava lending team · Updated
Florida is one of a handful of states with no personal income tax, which means individual investors keep the state’s share of every dollar of gain when they sell. That does not make a Florida exit tax-free — federal capital gains tax, the net investment income tax, and depreciation recapture still apply, and Florida collects its own transfer and property taxes along the way. This guide breaks down exactly which taxes apply to Florida real estate investors, which ones don’t, and what to plan for at purchase, during ownership, and at sale. It was reviewed on July 12, 2026.
Florida does not tax individual capital gains because it has no state personal income tax. When you sell a Florida property, you owe only federal capital gains tax — 0%, 15%, or 20% on long-term gains depending on your income, plus a possible 3.8% net investment income tax at higher incomes. Florida C-corporations do pay the state corporate income tax, and every seller should budget for documentary stamp taxes at closing.
- Florida has no state individual income tax, so individuals pay zero state capital gains tax on the sale of Florida real estate.
- Federal capital gains tax always applies: short-term gains are taxed at ordinary income rates, long-term gains at 0%, 15%, or 20% by bracket.
- Higher earners may also owe the 3.8% net investment income tax, and rental property sellers face depreciation recapture taxed at up to 25%.
- Florida C-corporations pay the state corporate income tax on Florida-sourced income, including gains — entity structure matters.
- The real recurring costs in Florida are property taxes, documentary stamp taxes at transfer, and property insurance, not state capital gains tax.
Florida has no state capital gains tax for individuals
Individuals pay no Florida state tax on capital gains, because Florida does not levy a personal income tax of any kind. The Florida Constitution prohibits a state tax on the income of natural persons, so there is no state return to file and no state rate to calculate when you sell stock, a rental property, or a flip as an individual.
This applies regardless of where you live. A New York or California resident who sells a Florida property owes nothing to Tallahassee on the gain — though their home state may still tax it under its own residency rules. Florida’s advantage accrues fully to Florida residents and to entities that aren’t taxed as C-corporations.
The Florida Department of Revenue confirms the state’s tax structure is built on sales tax, corporate income tax, documentary stamp taxes, and locally administered property taxes — not personal income. For an investor comparing states, that puts Florida in the same no-tax club as Texas, Tennessee, and Wyoming.
Federal capital gains tax still applies to every Florida sale
No state income tax does not mean no capital gains tax. The IRS taxes gains on Florida property the same way it taxes gains everywhere else in the country, and the rate depends primarily on how long you held the asset.
Property held one year or less generates short-term capital gains, taxed at ordinary federal income rates — currently as high as 37% for top brackets. Property held longer than one year qualifies for long-term capital gains rates of 0%, 15%, or 20%, with the rate determined by your taxable income for the year. The income thresholds for each rate adjust annually; the IRS publishes current figures in Topic No. 409, Capital Gains and Losses.
The table below summarizes the tax layers a Florida investor faces at sale. Note that only one line — the corporate income tax — involves the state of Florida at all, and it only applies to C-corporations.
| Tax | Applies in Florida? | Who pays | Rate structure |
|---|---|---|---|
| Florida state capital gains tax | No | No one — Florida has no personal income tax | N/A |
| Federal long-term capital gains | Yes | Individuals and pass-through owners, on property held over 1 year | 0%, 15%, or 20% depending on taxable income |
| Federal short-term capital gains | Yes | Sellers of property held 1 year or less — common on flips | Ordinary income rates, up to 37% |
| Net investment income tax (NIIT) | Yes, at higher incomes | Individuals above $200,000 MAGI (single) or $250,000 (married filing jointly) | Additional 3.8% on net investment income |
| Depreciation recapture | Yes | Sellers of depreciated rental property | Unrecaptured Section 1250 gain taxed at up to 25% |
| Florida corporate income tax | Yes, for C-corporations only | C-corporations with Florida-sourced income, including gains | 5.5% as of the review date, per the Florida Department of Revenue |
NIIT and depreciation recapture: the two surprises at exit
The two federal charges that most often surprise Florida rental sellers are the net investment income tax and depreciation recapture — both stack on top of the base capital gains rate.
The NIIT adds 3.8% to net investment income — which generally includes capital gains, rents, and interest — once modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly. Those thresholds are set by statute and do not adjust for inflation, so a single large sale year can push an otherwise moderate-income investor over the line. The IRS explains the mechanics in its net investment income tax guidance.
Depreciation recapture hits landlords specifically. Every year you depreciate a rental, you reduce your cost basis; when you sell, the gain attributable to that depreciation — called unrecaptured Section 1250 gain — is taxed at a maximum rate of 25% rather than the standard long-term rate. On a property held and depreciated for a decade, recapture can be a larger line item than the capital gains tax itself.
Neither of these is a Florida tax, and neither is avoided by living in Florida. They are the reason a Florida exit is “state-tax-free” rather than “tax-free,” and why sellers typically model the full federal stack before listing.
Florida C-corporations do pay state tax on gains
Florida’s no-income-tax rule applies to natural persons, not to C-corporations. Corporations doing business in Florida — including those that realize gains on Florida real estate — are subject to the Florida corporate income tax, which stands at 5.5% as of this article’s review date according to the Florida Department of Revenue.
This is why entity structure matters more in Florida than investors sometimes assume. Most individual investors hold rentals in LLCs taxed as disregarded entities or partnerships, where income and gains pass through to the owners’ personal returns — and Florida imposes no personal income tax on that flow-through. An LLC that elects C-corporation treatment, or a standalone C-corporation, brings the 5.5% state tax into play on Florida-sourced income.
Whether pass-through or corporate treatment is better for your situation depends on far more than this one rate — self-employment tax, federal corporate rates, qualified business income treatment, and exit plans all factor in. That is a conversation for a CPA or tax attorney, not a lender. The practical point: don’t assume “Florida has no income tax” covers every entity type, because it doesn’t.
The costs Florida investors should actually plan for
Florida makes up for the absence of an income tax with transaction taxes, property taxes, and an insurance market shaped by hurricane exposure. For most investors these recurring and closing costs matter far more to deal math than the capital gains tax they will never pay the state.
Documentary stamp tax. Florida taxes real estate transfers at $0.70 per $100 of the sale price in most counties (Miami-Dade uses a $0.60 base rate plus a surtax from which single-family residences are exempt). Financed deals also pay documentary stamp tax of $0.35 per $100 on the note plus a nonrecurring intangible tax of 2 mills on new mortgages. Rates and details are published by the Florida Department of Revenue.
Property taxes. Florida property taxes are locally assessed and vary meaningfully by county. Investment property gets none of the homestead exemptions or the 3% Save Our Homes assessment cap that owner-occupants enjoy; non-homestead property instead carries a 10% annual assessment-increase limitation. Budget for the unrestrained millage on your actual purchase price, not the previous owner’s capped bill.
Insurance. Windstorm and hurricane exposure make property insurance one of the largest operating line items on Florida rentals, and coastal and older properties price accordingly. Lenders underwrite debt service coverage using real insurance quotes, so pull one early — an optimistic insurance estimate is one of the most common reasons a Florida deal that looks strong on paper underwrites weaker in practice.
| Cost | When it hits | What to know |
|---|---|---|
| Documentary stamp tax on the deed | At sale or purchase (transfer) | $0.70 per $100 of price in most counties; Miami-Dade uses a $0.60 base plus surtax (single-family exempt from surtax) |
| Documentary stamp tax on the note + intangible tax | At loan closing | $0.35 per $100 on the note, plus 2 mills nonrecurring intangible tax on new mortgages |
| Property tax | Annually | County-assessed; no homestead benefits on investment property; 10% non-homestead assessment cap |
| Property insurance | Annually | Hurricane and windstorm exposure drives premiums; get real quotes before underwriting a deal |
What this means at exit: flips versus long-term rentals
The federal tax character of your gain depends on holding period and intent, so flip investors and buy-and-hold investors face very different exit math even in a no-income-tax state.
Flips are usually short-term. A property bought, renovated, and sold within a year generates short-term gain taxed at ordinary federal rates, and investors who flip regularly may find the IRS treats the activity as a business — with profits taxed as ordinary income rather than capital gains at all. Florida’s lack of a state income tax softens the total bill relative to a high-tax state, but the federal side is the same everywhere. Investors running renovation projects often use short-term financing like Florida fix and flip loans sized to the project timeline rather than the tax calendar.
Long-term rentals earn the preferential 0%/15%/20% treatment after a year, subject to NIIT and depreciation recapture as covered above. Many landlords never trigger the tax at all during their investing years: federal law allows sellers of investment property to defer gain by exchanging into other qualifying investment property under Section 1031, subject to strict timelines and rules the IRS outlines in its like-kind exchange guidance. Whether a deferral strategy fits your situation is a question for a qualified intermediary and tax advisor — the point here is simply that holding longer opens options a quick sale doesn’t.
Short-term rental operators sit in the middle: an Airbnb held for years exits like any long-term rental, while the operating income along the way is where the tax treatment gets specialized. Investors financing these properties with Airbnb and STR DSCR loans should model both the operating tax picture and the eventual exit with an advisor who knows short-term rental rules.
How Florida compares with other no-tax states
Florida is one of the states with no individual capital gains tax, but the no-tax states are not interchangeable — they differ in transfer taxes, property taxes, insurance, and entity-level rules.
Texas also has no personal income tax but generally carries higher effective property tax rates and a franchise tax on many entities; see our breakdown of Texas capital gains tax. Tennessee fully phased out its tax on investment income and is covered in our Tennessee capital gains tax guide. Wyoming pairs no income tax with comparatively low property taxes, detailed in our Wyoming capital gains tax article.
Florida’s distinct profile is high transaction volume costs (documentary stamps), meaningful insurance expense, and a large, liquid investor market with strong rental demand. For a full state-by-state view, start with our guide to the states without capital gains tax.
Underwriting a Florida deal with the full cost picture
Smart Florida underwriting treats state capital gains tax as a zero and focuses on the numbers that actually move: purchase-side stamps, realistic post-sale property tax reassessment, current insurance quotes, and the federal tax bill at your planned exit.
For rentals, that means running debt service coverage with the reassessed tax bill and a live insurance quote rather than the seller’s numbers — you can pressure-test a deal in minutes with a DSCR calculator. For flips, it means modeling the exit at short-term federal rates and including both sides’ documentary stamps in the deal budget.
None of this is tax advice, and this article can’t substitute for a CPA who knows your full return. But investors who plan around Florida’s real cost structure — rather than celebrating a state tax that never applied to them anyway — consistently underwrite closer to actual results.
Where Mortava fits for Florida investors
Mortava is a direct lender for business-purpose investment property loans in all 50 states, including Florida. For long-term and short-term rentals, our Florida DSCR loans qualify on the property’s rental income — no personal income documentation — with up to 85% LTV on purchases, 30- and 40-year fixed and interest-only options, loan amounts from $100K to $3.5M, and the ability to close in an LLC or corporation.
For renovation projects, Florida fix and flip financing goes up to 95% LTC with 100% of rehab costs funded and term sheets in as little as 2 hours. Airbnb and vacation rental investors can use our STR DSCR program built for short-term rental income. Every quote starts with a soft credit inquiry, so checking your terms won’t affect your score. Financing structure never changes what you owe the IRS — for tax planning, work with a qualified tax professional.
Build an indicative term sheet in minutes — soft credit inquiry only, subject to underwriting review.
Frequently asked questions
This article is general education only — not tax, legal, or investment advice. Tax outcomes depend on your income, entity structure, residency, holding period, and current law; confirm your situation with a qualified tax professional. Information was reviewed as of the "last updated" date above and may change.