Capital Gains on a Florida Home Sale: A 2026 Snowbird & Second-Home Tax Guide
Sell your main home in Florida and you might owe nothing in capital gains tax. The federal government lets a married couple exclude up to $500,000 of gain, and Florida charges no state income tax at all (IRS Topic 701; Florida Department of Revenue, 2026). But sell a second home or a snowbird condo, and the math changes fast. Here’s what applies in 2026 — and why you should run your own numbers past a CPA before you sign anything.
A note before we start: This guide is educational, not tax advice. Capital gains rules turn on the specific facts of your ownership, income, and residency. Always confirm your situation with a CPA or tax advisor before you list or close.
Do you owe capital gains tax when you sell a Florida home?
Maybe — it depends on the home. Florida levies no state income tax, so there’s never a state capital gains bill (Florida Department of Revenue, 2026). Federal tax still applies, but if the property was your main home and you pass the ownership and use tests, you can exclude up to $250,000 of gain (single) or $500,000 (married filing jointly) under IRS Section 121 (IRS Topic 701, 2025).
That single distinction — main home versus second home — drives everything below. A primary residence gets the exclusion; a vacation home, rental, or investment property does not. So the first question a CPA will ask isn’t “how much did it sell for?” It’s “did you live there?” If you’re weighing a sale, our sellers’ resource hub is a good place to start planning.
Florida imposes no personal income tax and therefore no state capital gains tax on individuals (Florida Department of Revenue, 2026). At the federal level, gain on a main home may be excluded up to $250,000 for single filers or $500,000 for joint filers under IRC Section 121, provided the ownership and use tests are met (IRS Topic 701, 2025).
The Section 121 primary-residence exclusion, explained
Section 121 lets you exclude up to $250,000 of gain if you’re single, or $500,000 if you’re married filing jointly, on the sale of your main home (IRS Publication 523, 2025). To qualify, you must have owned the home and lived in it as your main residence for at least two of the five years ending on the sale date — the ownership test and the use test.
Two more details matter. The two years don’t have to be consecutive; 24 months of use scattered across the five-year window counts (IRS Topic 701, 2025). And you generally can’t claim the exclusion if you already used it on another home sale within the two years before this one. Miss either test, and the gain becomes fully taxable — the kind of surprise a quick call with a CPA prevents.
Under IRC Section 121, you can exclude up to $250,000 (single) or $500,000 (married filing jointly) of gain on a main home if you owned and used it as your primary residence for at least 24 months out of the five years ending on the date of sale, and haven’t claimed the exclusion on another sale in the prior two years (IRS Publication 523, 2025).
Why a second home or investment property doesn’t qualify
The exclusion is reserved for your main home — the one where you actually live most of the year. A second home, vacation property, snowbird condo, or rental doesn’t meet the use test, so none of its gain is shielded by Section 121 (IRS Publication 523, 2025). The entire profit is taxable, which is why the same dollar gain can be tax-free on one property and heavily taxed on another.
Local insight: Here’s what trips up snowbirds — the IRS looks at where you actually live, not where your heart is. If your Florida place hasn’t been your main home for at least two of the last five years, the $250,000/$500,000 exclusion is off the table, even if you’ve owned it for a decade. Where you spend most nights, get your mail, and register to vote all speak louder than the deed.
There’s a middle path. Convert a second home into your primary residence, live there long enough to pass the two-year use test, and part of the gain can qualify later — though the years it wasn’t your main home (“nonqualified use”) reduce the excludable share. See our guide to selling a waterfront home in Palm Beach County, and map the timing with a tax advisor first.
The Section 121 exclusion applies only to a taxpayer’s main home. Gain on a second home, vacation property, or investment property is fully taxable because it fails the use test that requires the home to be your primary residence for at least two of the five years before the sale (IRS Publication 523, 2025).
What are the 2026 short-term and long-term capital gains rates?
How long you owned the property sets the rate. Hold it one year or less and the gain is short-term, taxed at your ordinary income rate — the same brackets as your salary (IRS Topic 409, 2026). Hold it more than a year and the gain is long-term, taxed at a preferential 0%, 15%, or 20% based on your taxable income. Most home sellers fall into the long-term category.
The 0/15/20 rate you pay depends on your total taxable income, not just the size of the gain. Here are the 2026 long-term thresholds set by the IRS in Revenue Procedure 2025-32:
| Filing status | 0% rate | 15% rate | 20% rate |
|---|---|---|---|
| Single | Up to $49,450 | $49,450 – $545,500 | Over $545,500 |
| Married filing jointly | Up to $98,900 | $98,900 – $613,700 | Over $613,700 |
| Head of household | Up to $66,200 | $66,200 – $579,600 | Over $579,600 |
One more layer for higher earners: a 3.8% Net Investment Income Tax can apply on top of the 15% or 20% rate once your modified adjusted gross income tops $200,000 single or $250,000 married filing jointly — thresholds that Congress has never indexed for inflation (IRS, 2026). A large one-time home gain can push you over that line for the year, so it’s worth modeling with a professional.
Gains on property held one year or less are short-term and taxed as ordinary income; gains on property held more than a year are long-term and taxed at 0%, 15%, or 20% (IRS Topic 409, 2026). For 2026, the 15% long-term rate covers taxable income from $98,900 to $613,700 for joint filers (IRS Revenue Procedure 2025-32; Tax Foundation, 2026). A 3.8% Net Investment Income Tax may apply above $250,000 MAGI (joint).
Does Florida tax your capital gains?
No. Florida has no personal income tax, so there is no state-level capital gains tax on individuals — none on your salary, your dividends, or the profit from selling a home (Florida Department of Revenue, 2026). The prohibition is written into Article VII, Section 5 of the Florida Constitution, which bars a personal income tax unless voters approve one by supermajority.
One caveat for snowbirds: “no Florida tax” doesn’t always mean “no state tax.” If you’re still a legal resident of a state like New York, New Jersey, or Illinois when you sell, that state can tax the gain. The zero-tax benefit only lands once Florida is genuinely your legal home — which brings us to domicile.
Florida does not impose a personal income tax and therefore has no state capital gains tax on individuals (Florida Department of Revenue, 2026). The ban is anchored in Article VII, Section 5 of the Florida Constitution, which requires a statewide supermajority vote to enact any income tax on natural persons.
How do snowbirds establish Florida domicile?
Establishing Florida as your legal domicile takes deliberate steps, not just a winter tan. Snowbirds typically file a Declaration of Domicile under Florida Statute 222.17, get a Florida driver’s license, register to vote, and spend more than half the year in the state while tracking their days (The Florida Legislature, 2026). The goal is to show Florida is your permanent, principal home.
Why the paperwork? Your former state wants its tax, and many use a “statutory residency” rule: keep a home there and spend more than 183 days there in a year, and it can still treat you as a resident and tax your income — including a home-sale gain. For anyone relocating, our guide on moving to Jupiter from New York walks through the transition.
Local insight: File your Declaration of Domicile before you close on a big sale, not after. Your former state scrutinizes the timing of a major financial event — if it can argue you were still a resident on closing day, it can tax the gain. A CPA can confirm your residency is airtight before you sign the contract.
Florida Statute 222.17 lets a resident file a sworn Declaration of Domicile establishing Florida as their permanent home (The Florida Legislature, 2026). But a former state can still tax a departing resident under its statutory residency test if they keep a home there and spend more than 183 days in-state during the year, so timing a sale around a confirmed domicile change matters.
How do cost basis and improvements lower your gain?
Your taxable gain isn’t the sale price — it’s the profit above your adjusted cost basis. Basis starts with what you paid for the home, then rises with capital improvements like a new roof, impact windows, or an addition (IRS Publication 523, 2025). Selling costs such as commissions reduce the amount you realize. A higher basis and lower net proceeds mean a smaller gain.
Local insight: Save every improvement receipt. A new roof, impact windows, a pool, or a kitchen remodel all add to your basis and shrink your taxable gain — but routine repairs like repainting or fixing a leak don’t count. Decades of documented upgrades can quietly erase tens of thousands of dollars in gain. Not sure what your place is worth today? Start with a home value estimate.
Let’s put it together with a worked example. Say a married couple bought a Palm Beach County home for $400,000, added $75,000 in capital improvements over the years (adjusted basis: $475,000), and sold for $1,000,000 with $75,000 in selling costs. Their amount realized is $925,000, so the gain is $450,000. Now watch how the same $450,000 gain is taxed two very different ways.
As a primary residence, the couple’s $450,000 gain fits under the $500,000 joint exclusion, so they owe $0 federally and $0 to Florida. As an identical second home with no exclusion, the full $450,000 is a long-term gain taxed at 15% — $67,500 federally (a 3.8% Net Investment Income Tax could add roughly $17,100 more for high earners). Florida still charges nothing. Same property, same profit, very different outcome.
Taxable gain equals your amount realized (sale price minus selling costs) less your adjusted basis (purchase price plus capital improvements) (IRS Publication 523, 2025). On a $450,000 gain, a qualifying primary residence owes $0 federal tax under the $500,000 joint exclusion, while an identical second home owes $67,500 at the 15% long-term rate (IRS Topic 409; Revenue Procedure 2025-32, 2026).
Can you defer or reduce the tax? 1031 exchanges and FIRPTA
For an investment property — not a primary residence — a 1031 like-kind exchange lets you defer the gain by rolling the proceeds into another business or investment property, following strict timing rules (IRS, 2026). It only applies to property held for business or investment use, so your main home and a purely personal second home don’t qualify. Depreciation you claimed on a rental can also face recapture at up to 25% (IRS Topic 409, 2026).
Selling as a foreign person adds another wrinkle: FIRPTA. The buyer must generally withhold 15% of the sale price when a foreign seller disposes of U.S. real estate, applied against the seller’s eventual tax bill (IRS, 2026). A reduced rate or a withholding certificate can lower it in some cases. Our first-time seller guide covers the basics, but a cross-border sale really needs a CPA.
A 1031 like-kind exchange can defer gain on business or investment real estate rolled into similar property, but never on a primary residence or personal-use home (IRS, 2026). When a foreign person sells U.S. real property, FIRPTA generally requires the buyer to withhold 15% of the amount realized (IRC Section 1445; IRS, 2026).
Frequently asked questions about capital gains on a Florida home sale
Do I pay capital gains tax when I sell my home in Florida?
Possibly at the federal level, but never to Florida, which has no state income tax (Florida Department of Revenue, 2026). If the home was your main residence and you meet the ownership and use tests, you can exclude up to $250,000 of gain (single) or $500,000 (joint) under IRS Section 121. Always confirm with a CPA.
Does the $500,000 exclusion apply to a vacation or second home?
No. The Section 121 exclusion applies only to your main home — the one you live in most of the year (IRS Publication 523, 2025). A vacation home, snowbird condo, or rental fails the use test, so its entire gain is taxable. Converting it to your primary residence first can change that, with limits.
How long must I live in a home to qualify for the exclusion?
You must have owned and used the home as your main residence for at least two years (24 months) out of the five years ending on the sale date (IRS Topic 701, 2025). The two years need not be consecutive, and you generally can’t have used the exclusion on another sale in the prior two years.
What is the capital gains tax rate on a second home in 2026?
If held more than a year, the gain is long-term and taxed at 0%, 15%, or 20% depending on your taxable income (IRS Topic 409, 2026). For 2026, joint filers pay 15% on taxable income from $98,900 to $613,700. A 3.8% Net Investment Income Tax may apply above $250,000 MAGI (joint).
Does Florida have a state capital gains tax?
No. Florida imposes no personal income tax, so there is no state capital gains tax on individuals (Florida Department of Revenue, 2026). The ban is set in Article VII, Section 5 of the Florida Constitution. But if you’re still domiciled in another state when you sell, that state may tax the gain.
Can a 1031 exchange help me avoid capital gains on a rental property?
A 1031 like-kind exchange can defer — not erase — the gain on an investment or business property by reinvesting the proceeds into similar real estate under strict timelines (IRS, 2026). It doesn’t apply to a primary residence or a personal second home. A qualified intermediary and a CPA are essential.
Cibie Cahur leads The Cahur Group at Keller Williams Realty, serving buyers and sellers across Palm Beach and Martin County, Florida. A Top 1% Keller Williams agent from 2017 through 2024, she works with an eight-agent team and serves clients in English, Spanish, and French. Reach her at 561-401-5758.
Thinking about selling a Florida home — your primary residence or a second home? Let’s map your net proceeds and timing before you list. Contact The Cahur Group or call 561-401-5758 to get started. For tax questions specific to your situation, we’ll point you to a trusted CPA.
Sources
- Internal Revenue Service. “Topic no. 701, Sale of your home.” irs.gov/taxtopics/tc701 (retrieved 2026-07-15).
- Internal Revenue Service. “Publication 523 (2025), Selling Your Home.” irs.gov/publications/p523 (retrieved 2026-07-15).
- Internal Revenue Service. “Topic no. 409, Capital gains and losses.” irs.gov/taxtopics/tc409 (retrieved 2026-07-15).
- Internal Revenue Service. “IRS releases tax inflation adjustments for tax year 2026 (Revenue Procedure 2025-32).” irs.gov/newsroom (retrieved 2026-07-15).
- Tax Foundation. “2026 Tax Brackets and Federal Income Tax Rates.” taxfoundation.org/data/all/federal/2026-tax-brackets (retrieved 2026-07-15).
- Internal Revenue Service. “Like-kind exchanges — Real estate tax tips (IRC Section 1031).” irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips (retrieved 2026-07-15).
- Internal Revenue Service. “FIRPTA withholding.” irs.gov/individuals/international-taxpayers/firpta-withholding (retrieved 2026-07-15).
- Internal Revenue Service. “Questions and Answers on the Net Investment Income Tax.” irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax (retrieved 2026-07-15).
- Florida Department of Revenue. “Does Florida have a capital gains tax?” floridarevenue.com (FAQ 1307) (retrieved 2026-07-15).
- The Florida Legislature. “Florida Statutes §222.17 — Manifesting and evidencing domicile in Florida.” leg.state.fl.us (Statute 222.17) (retrieved 2026-07-15).