Capital Gains Tax When You Sell a Home in Florida

Most people who sell their main home in Miami-Dade or Broward pay no tax on the profit. Federal law lets you exclude up to $250,000 of gain ($500,000 for married couples filing jointly) if you owned and lived in the home for at least two of the last five years, and Florida has no state income tax. Tax mainly comes into play for very large gains, rentals, flips and foreign sellers.

The $250,000 / $500,000 home sale exclusion

The exclusion comes from Section 121 of the tax code and is explained in IRS Publication 523. To get the full amount you must pass three tests:

1. Ownership: you owned the home for at least 24 months in the 5 years before the sale.
2. Use: you lived in it as your main home for at least 24 months (730 days) in those 5 years. The time does not have to be continuous.
3. Look-back: you did not use the exclusion on another home sold in the prior 2 years.

For the $500,000 joint exclusion, only one spouse has to meet the ownership test, but both must meet the use test. If you fall short because of a job move, a health reason or an unforeseeable event (such as a death, divorce or job loss), you may still qualify for a partial exclusion.

Is the exclusion changing? Congress is considering bills to raise or eliminate the tax on home sales, including the More Homes on the Market Act, which would double the limits. As of late October 2026 none had passed either chamber, so the $250,000 / $500,000 limits still apply. We will update this page if that changes.

How to figure your gain

Your gain is not simply the sale price minus what you paid. You subtract your selling costs and add improvements to your basis:

A married couple filing jointly would owe nothing on that $400,000 gain. A single owner would exclude $250,000 and report $150,000 as a long-term capital gain. These numbers are a made-up example to show the math, not a prediction for any house.

Improvements that add value or extend the life of the home count toward basis: a new roof, impact windows or shutters, a new A/C system, an addition, a remodeled kitchen or new plumbing. Ordinary repairs and maintenance, like painting a room or fixing a leak, do not. Keep receipts and permit records, because the burden of proof is on you. You can estimate your selling costs with our seller net sheet.

2026 federal capital gains rates

If part of your gain is taxable and you owned the home more than one year, it is taxed at long-term rates based on your total taxable income:

Higher-income sellers may also owe the 3.8% net investment income tax on the taxable part of the gain (it applies above $200,000 of modified adjusted gross income for single filers and $250,000 for joint filers). Property held one year or less is taxed at ordinary income rates. Because Florida has no personal income tax, there is no state tax on top of these.

Rentals, investment property and flips

The exclusion only covers your main home. Investors face different rules:

• Rental property: the whole gain is taxable, and depreciation you took (or could have taken) is "recaptured" and taxed at up to 25%.
• Former rentals you moved into: time after 2008 when the home was not your main residence is generally "nonqualified use," and that share of the gain can't be excluded.
• Flips: if you buy, renovate and resell as a business, the IRS may treat the profit as ordinary business income, not capital gain. Ask your CPA how your flips are classified.
• Deferring tax: investment and rental property (not your home or a flip) may qualify for a 1031 exchange into another investment property.

Inherited homes and adding children to the deed

Many Cuban and Hispanic families in Miami bought decades ago and want to pass the house to their kids. Taxes are a big reason to plan carefully. When you inherit a home, your basis is generally the fair market value on the date of death, so a later sale often produces little or no taxable gain. But if parents simply add a child to the deed while they are alive, that is treated as a gift and the child usually keeps the parents' original, much lower basis. Talk to an estate attorney about options before signing a new deed. Our guide to selling an inherited house in Florida covers probate and the sale itself.

Foreign sellers, FIRPTA and reporting

If the seller is a foreign person (a nonresident alien, not a U.S. citizen or green card holder), the buyer must withhold part of the price under FIRPTA and send it to the IRS:

• 15% of the amount realized in most sales.
• 10% if the buyer will live in the home and the price is $1 million or less.
• 0% if the buyer will live in the home and the price is $300,000 or less.

The title company usually handles this, sending the money with Forms 8288 and 8288-A within 20 days of closing. Withholding is a prepayment, not the final tax. A seller whose actual tax is lower can apply for a withholding certificate on Form 8288-B before closing, or file a U.S. return afterward to get a refund, which requires a taxpayer ID number (ITIN). U.S. citizens living abroad are not foreign persons for FIRPTA and sign a non-foreign certification at closing.

Reporting the sale

The closing agent may issue a Form 1099-S. If you have taxable gain, or you received a 1099-S, report the sale on Form 8949 and Schedule D with your return. Keep your closing statements from both the purchase and the sale, plus your improvement records, for as long as you own the home and several years after.

How we can help

Before you list, we can pull your purchase records from the Miami-Dade or Broward public records, estimate today's value and build a net sheet so you and your CPA know the likely gain early. We work with families from Homestead to Hialeah and Key Largo, in English or Spanish. Call (786) 545-9222 or ask for a free home-value check.

Frequently asked questions