What is the gain
The taxable gain is generally the sale price minus selling costs minus your adjusted basis, which starts with the purchase price plus qualifying improvements. Keep records of what you paid and what you improved.
These are general principles and are not tax advice.
Short-term and long-term
Gains on property held longer than one year are generally taxed at long-term rates, which are lower than ordinary rates, while shorter holding periods are taxed as ordinary income. Rates and thresholds change.
Ask your tax professional which rates apply to you.
Primary residence exclusion
U.S. tax rules allow many sellers of a primary residence to exclude part of the gain if they owned and lived in the home for the required period. The amount and conditions are set by the IRS, so check the current rules.
Second homes, rentals and investment properties generally do not qualify.
Investors and 1031
Investors may defer tax by exchanging into like-kind property under strict rules and deadlines. This must be planned before closing.
See our guide on 1031 exchanges in Florida.
Foreign sellers
Non-resident sellers are subject to FIRPTA withholding at closing, which is a prepayment and can sometimes be reduced with proper IRS paperwork. They may also need to file a U.S. tax return.
Speak with a U.S. tax professional before you sign a contract.
State and local items
Florida has no state income tax, but you still pay documentary stamps, prorated property taxes and other closing items. These are cost items, not tax on profit.
Include them in your net proceeds.
Common mistakes
Forgetting improvement records, assuming no tax in Florida means no tax at all, missing the 1031 timeline and ignoring FIRPTA.
Another mistake is waiting until after the sale to speak with a professional.
Checklist
Collect purchase and improvement records. Estimate your gain. Check eligibility for the exclusion. Decide whether an exchange or other planning fits. Speak with a tax professional before accepting an offer.
Plan before you list
Tax outcomes are shaped by decisions made before the contract: when you sell, how you document improvements and whether an exchange fits your plan. A short meeting with a tax professional before listing often costs less than fixing a problem afterwards.
Next step
We can prepare a net sheet for your agent and introduce you to a tax professional. Lidiya Tretyak is a licensed Florida real estate agent with Douglas Elliman and speaks English, Russian and Ukrainian; the first consultation is free.
This guide is general information, not legal or tax advice. Laws and programs change — confirm details with a Florida attorney and a US tax professional.
