As a financial advisor for almost 30 years, I’ve had countless clients. Executives from New Jersey, entrepreneurs from California… all move to Florida with the same belief: it’s a tax-free paradise. They hear “no income tax” and assume that means every sale is clear of state tax, but they often miss the hidden costs that can take a serious bite out of their profits.
Does Florida have a captial gains tax?
The simple answer is that Florida does not have a state-level capital gains tax for individuals. This is a massive advantage. However, you absolutely still owe federal capital gains tax, and Florida has other transaction-based taxes on real estate that can surprise unprepared sellers at closing.
Unlike generic AI summaries, this guide gives you the full, unvarnished picture.
Key Takeaways: Florida Capital Gains in 2025
- No State Tax, Full Federal Tax:
Florida is one of only nine states with no state income or capital gains tax for individuals. You will, however, pay federal capital gains tax at rates of 0%, 15%, or 20% on long-term gains, depending on your income. - The High-Earner Surtax Applies:
Don’t forget the Net Investment Income Tax (NIIT). If your income is above certain thresholds, an additional 3.8% federal tax applies to your capital gains, even in Florida. - Primary Home Sale is a Huge Win:
The federal Section 121 exclusion allows you to exempt up to $250,000 (or $500,000 for a married couple) in profit from your primary home sale, a crucial benefit for Florida retirees. - Myth Busted – Florida Real Estate Isn’t “Tax-Free”:
While you won’t pay state capital gains tax, Florida charges a documentary stamp tax on real estate sales, which can add up on a high-value property.
Quick Links: How Much Is The Capital Gains Tax in Florida
Federal Capital Gains Tax: The Rules That Follow You to Florida
The biggest mistake I’ve seen relocating clients make is forgetting that Uncle Sam’s rules apply in all 50 states. When you sell an asset—whether it’s stocks, bonds, or a business. You owe federal tax on the profit.
Here are the official 2025 federal long-term capital gains tax brackets.
| Tax Rate | Single Filers | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $64,750 |
| 15% | $48,351 – $533,400 | $96,701 – $600,050 | $64,751 – $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $566,700 |
⚠️ High-Earner Alert: The 3.8% Net Investment Income Tax (NIIT)
If your Modified Adjusted Gross Income exceeds certain thresholds (generally $200,000 for single filers and $250,000 for married couples), you are also subject to an additional 3.8% Net Investment Income Tax on top of your capital gains rate. This is the “hidden tax” that often surprises successful investors, and it absolutely applies in Florida.
Florida Real Estate: A Planner’s Deep Dive on Taxes
Real estate is where the Florida tax landscape gets nuanced. While the lack of a state capital gains tax is a huge draw, you must navigate these federal rules and state transaction costs.
The Home Sale Exclusion: Your Best Friend in Retirement
The most powerful tax break for homeowners is the Section 121 exclusion.
🔍 Explained Simply: The “2-out-of-5-Years” Rule
If you have owned and lived in your property as your primary residence for at least two of the five years leading up to the sale, you can exclude a massive amount of profit from federal taxes: up to $250,000 for a single filer and up to $500,000 if you’re married filing jointly. This is not a Florida rule; it’s a federal one that provides immense benefits to Florida homeowners.
💡 Michael Ryan Money Tip: A Client Story
I once had a client couple from New Jersey who sold their long-time home for a $600,000 profit after moving to Naples. Because they met the “2 out of 5 year” rule, they were able to exclude $500,000 of that gain from federal taxes, saving them nearly $75,000. This is the single most powerful tax break for homeowners, but you have to follow the rules precisely.
The Landlord’s Surprise Tax: Depreciation Recapture
If you’re selling a rental or investment property, the Section 121 exclusion does not apply. Furthermore, you face a specific tax called unrecaptured Section 1250 gain, more commonly known as depreciation recapture.
When you own a rental property, you are required to take a depreciation deduction on your taxes each year. When you sell, the IRS wants that tax benefit back. All the depreciation you’ve claimed over the years is “recaptured” and taxed at a maximum federal rate of 25%.
This is separate from, and in addition to, the capital gains tax you pay on the property’s appreciation.
The “Not a Capital Gains Tax” Closing Costs
Here’s what trips up nearly every new Florida real estate investor: the state has other taxes due at closing that affect your net proceeds.
- Documentary Stamp Tax:
Florida levies a tax on deeds when property is sold. The statewide rate is generally $0.70 per $100 of the sale price. On a $500,000 home, that’s a $3,500 tax paid to the state. - Nonrecurring Intangible Tax:
This tax of 0.2% applies to new mortgages on Florida property. While typically paid by the buyer, it’s a crucial part of the transaction costs to be aware of.
Strategies to Minimize Your Federal Capital Gains Tax Burden
While you can’t avoid federal taxes entirely, you can use smart, legal strategies to minimize their impact.
- Hold for the Long Term:
The simplest strategy. By holding an asset for more than one year, your profit qualifies for the lower long-term capital gains rates instead of being taxed as ordinary income. - Tax-Loss Harvesting:
If you have investments that have lost value, you can sell them to realize a loss. You can use that capital loss to offset your capital gains, reducing your total taxable amount. Just be mindful of the “wash-sale rule.” - Use Tax-Advantaged Accounts:
For your stock and bond investments, maximize contributions to accounts like a 401(k) or a Roth IRA. Gains inside these accounts are not subject to annual capital gains taxes. - Gift Appreciated Assets:
You can gift appreciated stock to family members in a lower tax bracket who can then sell it and pay a lower capital gains rate (or even 0%).
You can use the calculator below to get a general estimate of your potential federal tax liability.
Federal Capital Gains Tax Estimator (2025)
Estimated Federal Tax Impact
Total Capital Gain: $0.00
Applicable Tax Rate: 0%
Estimated Federal Tax Owed: $0.00
This is a simplified estimator for federal taxes only and does not account for state taxes, the Alternative Minimum Tax (AMT), or other complex situations. Consult a qualified tax professional for personalized advice.
Frequently Asked Questions (FAQ) About FL Capital Gains Tax
Explore next steps for unique situations. Now, try searching for: inherited property, 1031 exchange, or selling a business.
Q: What is the capital gains tax on cryptocurrency in Florida?
A: Florida does not have a state tax on crypto. For federal tax purposes, the IRS treats cryptocurrency as property. This means when you sell, trade, or spend it for a profit, you owe federal capital gains tax, just as you would with a stock.
Q: Do non-residents have to pay capital gains tax in Florida?
A: No. U.S. residents from other states who sell Florida property or assets do not owe any capital gains tax to Florida. They are still responsible for all federal taxes and must comply with the tax laws of their state of residence.
Q: What about foreign sellers of Florida real estate?
A: Foreign sellers face a different set of rules under a federal law called FIRPTA. This act typically requires that 15% of the gross sales price be withheld at closing to ensure the seller pays their required U.S. taxes. This is a withholding mechanism, not the final tax itself.
Your Next Move: Plan Before You Sell
While Florida’s tax landscape is incredibly favorable, “no state capital gains tax” does not mean “no tax at all.” The biggest mistakes are made when investors fail to account for the significant impact of federal taxes and Florida-specific closing costs.
By understanding the interplay between federal law and local policy, you can make informed decisions that protect your hard-earned profits. Proactive planning is the key to truly harnessing the financial advantages the Sunshine State has to offer.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
