1031 Exchange Rules in Florida

Last reviewed: June 2026. State rules change. Verify current rules before closing.

What Is Different in Florida

Florida is one of the most investor-friendly 1031 exchange states in the country. There is no state income tax, no state capital gains tax, no withholding at closing, and no state exchange paperwork. That is a big reason so much exchange money flows into Florida from high-tax states. The catch is federal: on a typical investment property sale, federal taxes can exceed 28% of the gain, and that is what a Florida 1031 exchange defers.

Does Florida Conform to IRC Section 1031?

There is nothing to conform to. Florida has no personal income tax, so the state takes no position on your exchange. A 1031 exchange is an IRS-approved way to sell investment property and buy replacement property without paying tax on the gain right away. In Florida, the exchange is purely a federal matter. Our 1031 exchange guide walks through how it works.

One closing-table note: Florida charges a documentary stamp tax when deeds record, and a 1031 exchange does not exempt it. Your closing agent collects it like any other sale.

Florida Tax Rate on Real Estate Gains

Zero. Florida does not tax individual income or capital gains. Compare that with New York at up to 10.9% or New Jersey at up to 10.75%, and you see why so many sellers exchange into Florida property.

Withholding at Closing

None. Florida has no withholding requirement on real estate sales, for residents or nonresidents. No exemption forms, no state certificates, no waiting on a state refund.

Federal Taxes Still Apply

This is the number that matters in Florida. Without an exchange, a sale faces three federal layers.

Example: $1,000,000 sale of a Florida rental. Original purchase $600,000, with $100,000 of depreciation taken, so the adjusted basis is $500,000 and the total gain is $500,000.

Figures are illustrative and rounded. Your rates depend on income, filing status, and basis. A qualifying 1031 exchange may defer all three federal layers. Run your numbers with our 1031 exchange calculators, then confirm them with your tax advisor.

Crossing State Lines

Florida exchanges usually involve another state on the sale side, and that state's rules control the closing.

• Selling in New York, buying in Florida. New York collects estimated tax on the gain at closing via Form IT-2663 unless you certify the 1031 exemption. Fully deferred exchanges owe nothing at closing.
• Selling in New Jersey, buying in Florida. New Jersey's so-called exit tax (greater of 10.75% of gain or 2% of price) is avoided at closing with the GIT/REP-3 exemption for fully deferred exchanges with no boot.
• Selling out of a claw-back state. Exchange out of California, Oregon, Montana, or Massachusetts and that state can still tax the deferred gain when you eventually cash out. Buying in Florida does not erase it.

Risks to Keep in Mind

• Federal deadlines are unforgiving. You have 45 days to identify replacement property and 180 days to close. See the IRS rules for 1031 exchanges.
• Boot is still taxable. Cash you take out or debt you fail to replace can create recognized gain, even with no state tax in play.
• Deferral is not elimination. The federal tax comes due when you eventually sell without exchanging, unless your estate plan uses the step-up in basis. Ask your estate planning attorney.
• Out-of-state obligations follow you. A prior exchange out of a claw-back state (California, Oregon, Montana, or Massachusetts) can carry filing duties into your new ownership.

Florida 1031 Exchange FAQs

Does Florida tax 1031 exchanges?
No. Florida has no state income tax, so there is no state tax to defer and no state exchange filing.

Why bother with a 1031 exchange in Florida if there is no state tax?
Federal taxes. Capital gains, depreciation recapture, and the net investment income tax can take more than a quarter of a typical gain. An exchange may defer all of it.

I am selling up north and buying in Florida. Whose rules apply?
The selling state's rules control your closing, including any withholding and exemption forms. Once you own in Florida, Florida adds nothing.

Do I still need a qualified intermediary?
Yes. The qualified intermediary requirement is federal. You cannot touch the sale proceeds and still qualify for deferral, no matter what state you are in.

Sources

• Internal Revenue Service, Like-Kind Exchanges, Real Estate Tax Tips
• Tax Foundation, State Individual Income Tax Rates and Brackets, 2026

Want to learn more? Our 1031 exchange guide covers the full process from sale to replacement. Ready to start a Florida exchange? WealthBuilder 1031 is attorney-owned, serves all 50 states, and charges a flat $1,000 fee. Start at WealthBuilder1031.com or call 888-508-1901.

This page does not constitute legal or tax advice. Consult your attorney and tax advisor about your specific situation.

Ready to start your Florida 1031 exchange? WealthBuilder 1031 acts as your qualified intermediary for a flat $1,000 fee, $750 at your sale and $250 at your purchase. See our Florida 1031 exchange services to get started.