State rules on top of the federal ones

1031 Exchanges in Florida

The federal rules are identical in every state — the 45/180-day deadlines, the intermediary, the equal-or-greater tests. What changes in Florida is the state tax layer: no state income tax — the exchange is purely federal, with one documentary-stamp footnote.

State tax on the gain

Florida has no state income tax for individuals, so there is no state capital gains tax on your sale. Your exposure is entirely federal: capital gains rates, depreciation recapture, and possibly the 3.8% net investment income tax.

Does Florida recognize 1031 deferral?

Nothing to conform to — Florida takes no position on individual capital gains or their deferral. The federal 1031 rules run the entire show: deadlines, qualified intermediary, identification, and the equal-or-greater tests.

Withholding at closing

No state income tax withholding applies at closing. One cost Floridians sometimes mistake for a tax on the exchange: documentary stamp taxes on deeds (and intangible tax on new mortgages) still apply to the transactions themselves, exchange or not — they're transfer costs, not income tax, and they aren't deferred by the 1031.

Exchanging into another state

Exchanging out of Florida creates no trailing state claim — there is no deferred Florida tax to track. As with other no-income-tax states, the caution runs the other way: gains exchanged into Florida from states with clawback rules (California most famously) carry the origin state's claim with them. Florida's popularity with relocating investors makes this the single most common cross-border wrinkle here.

Run your numbers with the Florida rate →The calculator takes your state tax rate — see the full deferral including the state layer

State tax rules change and have exceptions this page can't cover. Confirm current rates and filing requirements with a tax professional licensed in Florida.

Common Questions

Does Florida tax capital gains on investment property?

No — Florida has no personal income tax, so there is no state layer on your gain. Federal tax is the entire bill, and a 1031 exchange defers it under the normal federal rules.

Are there any Florida-specific costs in an exchange?

Documentary stamp taxes on the deeds and intangible tax on any new mortgage apply as ordinary transaction costs on both closings. They are not income taxes and are not deferred by the exchange.

I'm exchanging a New York rental into Florida — does New York tax follow me?

New York taxes nonresidents on New York-source gains, and a deferred gain from New York property retains that character. Florida adds nothing, but consult a professional about the origin state's claim on eventual sale.