Capital Gains Tax Selling a Home in Florida: How the $250,000/$500,000 Exclusion Works in 2026

Does Florida charge capital gains tax when you sell a home?

No. Florida does not charge a state capital gains tax on a home sale, because the Florida Constitution prohibits a state tax on the income of natural persons who are residents or citizens of the state, except up to amounts that can be credited against a similar federal tax (Fla. Const. Art. VII, s. 5(a)). The federal capital gains tax still applies to every Florida home sale, so the real question for a seller is whether the federal exclusion covers the profit.

Capital gains tax is the federal income tax on the profit from selling an asset, such as a house, measured as the difference between what you received and what the asset cost you for tax purposes. For a home, the profit is called the gain. A gain on property held more than one year is a long-term capital gain and is taxed at lower federal rates than wages; a gain on property held one year or less is a short-term gain taxed at ordinary income rates (IRS Tax Topic 409, accessed October 2026).

The belief to test: “Florida has no income tax, so my home sale is tax‑free”

Many sellers in Port St. Lucie, Florida, and in Palm Beach County hear “no state income tax” and conclude the sale is tax-free. The Florida half of that belief is correct. The federal half is not automatic. The federal tax code taxes the gain on any home sale unless an exclusion applies, and the exclusion has conditions on ownership, residence, timing and dollar amount. A seller who lived in the home as a main home for years and whose gain falls under the limit will usually owe nothing. A seller of a second home, a rental, or a long-held home with a large gain may owe a meaningful federal tax even though Florida collects nothing.

What Florida does collect at closing

Florida’s tax touchpoint on a sale is the documentary stamp tax on the deed, not an income tax. Documentary stamp tax is a Florida excise tax on documents that transfer an interest in real property, charged at 70 cents per $100 of consideration in every county except Miami-Dade (Florida Department of Revenue, accessed October 2026). In Port St. Lucie and Palm Beach County transactions, the seller customarily pays it, but the contract decides who pays. For the federal gain calculation, the IRS lets a seller treat transfer and stamp taxes paid on the sale as selling expenses, which reduces the gain (IRS Publication 523, 2025).

Two other myths sellers still repeat

• “You have to buy another house to avoid the tax.” That was the old rollover rule, replaced in 1997 by the Section 121 exclusion. Today there is no requirement to reinvest in another home.
• “People over 55 get a one-time exemption.” The one-time $125,000 exclusion for sellers aged 55 or older also ended with the 1997 change. Age does not matter under current law; ownership, use and timing do.

The rest of this guide explains how the federal exclusion works and how to estimate your number before you list. This section is general information about taxes; for advice on your own return, consult a Florida CPA or tax attorney.

How do you calculate the gain on a Florida home sale?

Your gain is the amount realized minus your adjusted basis. The amount realized is the sale price minus selling expenses; the adjusted basis is what you paid for the home plus qualifying purchase closing costs and improvements, minus certain reductions (IRS Publication 523, 2025). Only the gain above your exclusion is taxed.

Adjusted basis is what the home cost you for tax purposes after adding improvements and subtracting items such as depreciation, insurance reimbursements for casualty losses and certain energy credits. Amount realized is the total sale price minus the costs directly tied to selling the home. Both terms come from IRS Publication 523, the federal guide to selling a home.

What goes into the amount realized

Publication 523 starts with everything the buyer gives you: cash, the value of any other property, any debt the buyer assumes, and any real estate taxes the buyer pays on your behalf. Then it subtracts selling expenses, which Publication 523 lists as sales commissions, advertising fees, legal fees, loan charges you paid that would normally have been the buyer’s, and other fees or costs to sell the home. Real estate commissions are negotiable in Florida, and the amount you agree to with your listing agent and any buyer-agent compensation you choose to pay both reduce your gain.

For a Florida seller, typical selling-expense lines on the closing statement include the documentary stamp tax on the deed, the negotiated commission, any title or closing charges the contract assigns to the seller, and attorney fees. Prorated property taxes are not a selling expense; they are an adjustment between buyer and seller for the part of the year each owned the home. For a line-by-line view of what Port St. Lucie sellers pay at closing, see the guide to seller net proceeds in Port St. Lucie.

What goes into the adjusted basis

• Purchase price. What you paid for the home, including the down payment and any mortgage you took on. If you built the home, the cost of the land plus construction.
• Certain purchase closing costs. Publication 523 lists abstract fees, charges for installing utility services, legal fees (including title search and preparing the contract and deed), recording fees, survey fees, transfer or stamp taxes and owner’s title insurance as settlement costs that increase basis. Loan costs such as points, mortgage insurance premiums, appraisal fees required by a lender and credit report fees do not.
• Improvements. An improvement is work that adds to a home’s value, prolongs its life or adapts it to new uses, such as a new roof, central air conditioning, a kitchen modernization, an added bathroom or bedroom, or a new water heater (IRS Publication 523, 2025). The improvement must still be part of the home on the date of sale.
• Special assessments for local improvements. Publication 523 adds special assessments for local improvements that are not merely for repairs or maintenance, and Publication 530 says assessments for local benefits such as streets, sidewalks, or water and sewer systems are added to basis rather than deducted.

Repairs do not count. Publication 523 names painting, fixing leaks, filling holes or cracks and replacing broken hardware as repairs and maintenance that keep a home in good condition without adding value. A repair can become part of a larger improvement project, so keep invoices that show the full scope of the work.

What reduces the basis

Basis goes down for depreciation claimed for a home office or rental use, casualty losses claimed as a deduction, insurance payments received for casualty losses, and energy credits or subsidies received for improvements included in basis, such as a solar energy system (IRS Publication 523, 2025). Florida sellers who received hurricane insurance payouts should keep the claim file with the repair invoices: the money spent to restore the home is added, and the reimbursement is subtracted. Sellers with solar panels can read how the panels affect the listing in the guide to selling a Port St. Lucie home with solar panels.

Three illustrative sales, line by line

The table below runs the Publication 523 formula on three hypothetical Florida sales. The sale prices, purchase prices, improvements and “other selling expenses” are assumptions for illustration only, not market figures or quotes. The documentary stamp line uses the Florida Department of Revenue rate of $0.70 per $100. Your own figures come from your closing statements and receipts.

Two lessons sit in the middle column. First, Sale B shows how a single seller and a married couple with identical houses can land on opposite sides of the line. Second, every dollar of documented improvement lowers the gain dollar for dollar. If the Sale B seller had lost the $70,000 of improvement receipts, the taxable gain for a single filer would rise from $25,800 to $95,800.

This section explains the IRS formula in general terms; for how it applies to your basis and expenses, consult a Florida CPA.

What federal tax rate applies to home sale gain above the exclusion in 2026?

For a home owned more than one year, the taxable gain above the exclusion is taxed at 0%, 15% or 20%, depending on your total taxable income. For 2026, the 0% rate covers taxable income up to $49,450 for single filers and $98,900 for joint filers, and the 15% rate covers taxable income up to $545,500 and $613,700; income above those amounts is taxed at 20% (IRS Rev. Proc. 2025-32, section 4.03).

Taxable income means income after the standard deduction or itemized deductions, and the taxable part of the home sale gain is included in it. That is why a large gain can carry part of itself into a higher bracket. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly (IRS Rev. Proc. 2025-32, section 4.14).

2026 long-term capital gains thresholds by filing status

Source: IRS Revenue Procedure 2025-32, section 4.03, “Maximum Capital Gains Rate,” for taxable years beginning in 2026.

The 3.8% net investment income tax

The net investment income tax (NIIT) is a separate 3.8% federal tax on investment income, including taxable capital gains, for individuals whose modified adjusted gross income exceeds $200,000 (single or head of household), $250,000 (married filing jointly or qualifying surviving spouse) or $125,000 (married filing separately). The IRS states that these thresholds are not indexed for inflation, that gain excluded under Section 121 is not subject to the NIIT, and that gain from selling a second home or a rental property can be (IRS, “Questions and Answers on the Net Investment Income Tax,” accessed October 2026). The tax is figured on Form 8960.

Two other rates that can apply

• Short-term gain. A home owned one year or less produces a short-term gain, taxed at ordinary income rates. A seller who buys and resells within twelve months cannot use the long-term rates, and normally cannot use the exclusion either, because the 24-month tests are not met.
• Unrecaptured section 1250 gain. Unrecaptured section 1250 gain is the part of the gain equal to depreciation claimed (or allowable) on a home office or rental use after May 6, 1997. The exclusion does not cover it, and it is taxed at a maximum federal rate of 25% (IRS Publication 523, 2025; IRS Tax Topic 409).

Rough federal tax on the three illustrative sales

Using the taxable gains from the section 3 table, the arithmetic below shows the range. The rate that actually applies depends on the seller’s other income and deductions in the year of sale, so these are illustrations, not estimates for any real seller.

The gap between the single and joint rows for Sale C is the clearest case for checking marital status, residence dates and the use test before choosing a closing date. This section is general information on federal rates; for your own bracket and NIIT exposure, consult a Florida CPA.

Second homes, snowbirds and homestead: which Florida home is your main home?

Only your main home qualifies for the Section 121 exclusion, and a second home or seasonal home does not. When you own or live in more than one home, the IRS applies a “facts and circumstances” test in which the most important factor is where you spend the most time (IRS Publication 523, 2025).

Publication 523 lists other factors that point to a main home: the address on your U.S. Postal Service mail, voter registration card, federal and state tax returns, and driver’s license or car registration, and whether the home is near where you work, where you bank and where family members live. The more factors that point to one home, the stronger the case. A Port St. Lucie condominium, a mobile home or a single-family house can each be a main home.

Florida homestead is evidence, not the federal test

The Florida homestead exemption is a property tax exemption for a home that the owner holds title to and makes a permanent residence as of January 1 of the tax year (s. 196.031, Florida Statutes). Florida also lets a person file a sworn Declaration of Domicile with the clerk of the circuit court in the county where the person resides (s. 222.17, Florida Statutes). Both are strong evidence that a Florida home is your main home, but neither one is the federal test. The IRS looks at where you actually live. A seller who held Florida homestead but spent most of each year in another state has a weaker federal case than the homestead record suggests, and a seller who lived in Port St. Lucie year-round but never filed for homestead can still qualify.

Two clocks sellers confuse

Sellers who plan to sell one Florida homestead and buy another often mix up the federal two-out-of-five-year clock with Florida’s homestead portability window. They are different laws with different clocks. Section 121 looks back five years from the date of sale and asks whether you lived in the home 24 months. Florida portability lets a homestead owner transfer some or all of the Save Our Homes benefit to a new Florida homestead established within a set period after leaving the old one. Getting one right does not mean the other is satisfied. The series guide on Florida homestead portability when selling explains the property-tax side; sellers who want to estimate the tax on a new home can use the St. Lucie County property tax estimate guide.

Converting a second home into a main home

A seasonal owner who retires to a Florida second home and lives in it full time can eventually qualify, but not for the whole gain. Any period after 2008 during which the home was not used as a principal residence is “nonqualified use,” and the share of the gain allocated to that period cannot be excluded (26 U.S.C. s. 121(b)(5); IRS Publication 523, 2025). The allocation is by time: nonqualified-use days divided by total days of ownership. An owner who held a Jensen Beach condominium for ten years, used it as a seasonal home for the first six years after 2008 and as a main home for the last four, would generally allocate 60% of the gain to nonqualified use, before depreciation and other adjustments.

Owners who live in another state

Florida does not tax the gain, but the seller’s home state may. A seller who is a resident of a state with an income tax generally reports worldwide income to that state, which can include the gain on a Florida property. Nonresidents of the United States face a separate withholding rule at closing, explained in section 10. Sellers managing a sale from a distance can read the series guide on selling a Florida home from out of state. This section is general information; for residency and multi-state tax questions, consult a CPA licensed in your state of residence.

How are inherited homes, surviving spouses, divorce and gifts taxed when sold?

An heir’s basis in an inherited home is generally its fair market value on the date of the owner’s death, so a prompt sale often produces little or no gain. A surviving spouse can claim the full $500,000 exclusion on a sale within 2 years of the spouse’s death if the other conditions are met. A home received as a gift keeps the giver’s basis (IRS Publication 523, 2025).

Inherited homes: the stepped-up basis

A stepped-up basis is the rule that resets an inherited asset’s tax basis to its fair market value on the date of death, or on the alternate valuation date if the estate’s personal representative elects it (26 U.S.C. s. 1014; IRS Publication 523, 2025). An heir who sells a Port St. Lucie house a few months after the date of death, for about what it was worth on that date, usually has a small gain or a loss after selling expenses. A date-of-death appraisal is the document that proves the new basis; order it early in the estate process rather than reconstructing it years later. An heir who did not live in the home cannot use Section 121, so any gain after the date of death is taxable, and a loss on an inherited home that was never the heir’s residence may be treated differently than a loss on a personal residence. Sellers handling an estate can read the guide on how to sell an inherited home in Port St. Lucie.

Surviving spouses

A surviving spouse who sells within 2 years of the spouse’s death, has not remarried at the time of sale, and meets the ownership and use requirements can claim up to $500,000 (IRS Publication 523, 2025). The basis is also adjusted. When a married couple owned a home jointly, the deceased spouse’s half generally receives a basis equal to its value at death while the survivor’s half keeps its original basis. Publication 523 illustrates this with a jointly owned home with a $50,000 basis and a $100,000 fair market value at the first death: the survivor’s new basis is $75,000. In community property states, both halves are stepped up.

Florida is not a community property state, but since July 1, 2021 Florida law has allowed married couples to hold property in a Florida community property trust under the Florida Community Property Trust Act, sections 736.1501 through 736.1512, Florida Statutes. Estate planners use these trusts with the aim of a basis adjustment on both halves at the first death, with tradeoffs in creditor protection compared with tenancy by the entirety. Whether the federal basis rule for community property applies to a Florida trust of this kind is a question to settle with a CPA or estate attorney before you rely on it. This is an estate-planning decision made years before a sale, not at listing time.

Divorce

A transfer of a home between spouses, or to a former spouse incident to a divorce, is generally not a taxable sale, and the receiving spouse keeps the transferring spouse’s basis (26 U.S.C. s. 1041). For the use test, Publication 523 lets a seller count time when a spouse or former spouse lived in the home under a divorce or separation instrument, as long as the seller is a sole or joint owner. That rule lets a spouse who moved out still claim the exclusion when the home is sold later under the settlement terms. Divorce is also one of the unforeseeable events that can support a partial exclusion. The series guide on selling a house during a divorce in Florida covers the listing side.

Gifts

A home received as a gift during the giver’s lifetime keeps the giver’s adjusted basis, plus any federal gift tax paid; if the giver’s basis was higher than the home’s fair market value at the time of the gift, a different rule applies for losses (IRS Publication 523, 2025). Parents who “put the house in the children’s names” to avoid probate can pass along a low basis and a large future gain that a transfer at death would have reset. That tradeoff belongs with an estate attorney before the deed is signed. This section is general information on inheritance, divorce and gift taxation; for your situation, consult a Florida estate or family law attorney and a CPA.

Port St. Lucie and Palm Beach County: where do you find the records that prove your basis?

Your basis is proven with your original closing statement, your recorded deed, permits and invoices for improvements, and any assessment receipts. In St. Lucie County, the property appraiser shows the sale history for your parcel, the Clerk of the Circuit Court holds the recorded deed, and the City of Port St. Lucie Building Department or St. Lucie County holds the permit history; Palm Beach County has the same three sources.

A record checklist for St. Lucie County sellers

• Purchase date and price. The St. Lucie County Property Appraiser parcel record lists recorded sales with dates and prices. The recorded deed itself is in the official records of the St. Lucie County Clerk of the Circuit Court and Comptroller.
• Purchase settlement costs. Your original Closing Disclosure or settlement statement from the purchase. If you cannot find it, ask the title company that closed your purchase; its name is usually on the recorded deed.
• Improvement dates. Roof, air conditioning, window, door, shutter, pool, solar and addition permits from the City of Port St. Lucie Building Department for homes inside city limits, or from St. Lucie County for unincorporated areas. For city homes, the “Search Permits on a Property” tool at pandapublicweb.cityofpsl.com lists the permits on an address (City of Port St. Lucie, accessed October 2026). A permit date is not a cost, but it proves the improvement exists and when it was made; pair it with the contractor’s invoice.
• Improvement costs. Contractor invoices, cancelled checks and credit card statements. Bank and card providers can often supply older statements on request.
• Assessments. Tax bills from the St. Lucie County Tax Collector showing non-ad valorem assessments, and any receipts for one-time assessments you paid off.

Septic-to-sewer conversions in Port St. Lucie

Some Port St. Lucie homes have been converted from a septic system to central sewer service from Port St. Lucie Utility Systems, and the owner paid connection charges, plumbing work and abandonment of the old tank. Publication 530 says assessments for local benefits such as water and sewer systems are added to basis, and Publication 523 lists charges for installing utility services among basis items. Keep every receipt from a conversion, and ask your CPA which of those charges count as basis in your case. Sellers whose homes are still on septic can read the series guide on selling a house with a septic system in Port St. Lucie.

CDD assessments in Tradition and other districts

A Community Development District (CDD) is a special-purpose unit of local government created under Chapter 190, Florida Statutes, that finances community infrastructure such as roads, drainage and utilities, often with bonds repaid through annual non-ad valorem assessments on the tax bill. Many homes in Tradition, in Port St. Lucie, carry CDD assessments. The capital (debt service) portion pays for infrastructure, while the operations and maintenance portion pays for upkeep. Publication 530 treats assessments for local benefits that increase property value as basis, while assessments for maintenance or interest can be deductible instead. Whether a seller’s CDD capital payments, or a lump-sum payoff of the CDD bond balance, add to basis is a question for a CPA with the district’s assessment detail in hand. Keep the tax bills and any payoff letter so the CPA can separate the capital portion from the maintenance portion. For how buyers read CDD figures, see the guide to HOA and CDD fees in Tradition and the series guide on selling a home in Tradition, Port St. Lucie.

Palm Beach County sellers

In Palm Beach County, the Palm Beach County Property Appraiser shows parcel sales history, the Palm Beach County Clerk of the Circuit Court and Comptroller holds recorded deeds, and permits come from the county’s Planning, Zoning and Building Department for unincorporated areas or from each city’s building department in places such as West Palm Beach, Boca Raton, Delray Beach, Boynton Beach, Jupiter, Palm Beach Gardens and Wellington. Condominium owners should also gather receipts for special assessments the association levied for capital projects rather than repairs, because Publication 523 lists condominium association assessments that are not merely for repairs or maintenance as basis items. Palm Beach County sellers can review a city-specific example in the West Palm Beach seller guide.

For Jeannie Jacobson’s broader approach to selling a home in Port St. Lucie, start at the Port St. Lucie seller page; for home seller representation across the Treasure Coast and Palm Beach County, see the seller overview. This section is general information about records; for which items count in your basis, consult a Florida CPA.

This article is general information about the federal taxation of home sales and related Florida records, current as of October 2026. It is not legal, tax or financial advice, and Jeannie Jacobson and RE/MAX Gold do not provide tax advice. Tax law, rates and thresholds change; the figures here come from the IRS and other sources named in the text. Consult a Florida CPA or tax attorney about your own sale before you list, and a Florida real estate or estate attorney about title, trust, divorce or probate questions.

Frequently Asked Questions