In this guide
- The rules: federal law, Florida address
- The Florida tax picture (and the doc stamp everyone forgets)
- The Florida specialty: vacation-home conversions
- The snowbird stack: exchange now, residence later
- No QI law in Florida either
- The Florida market: what exchangers trade
- Buying in from out of state
- Foreign owners: the FIRPTA layer
- Frequently asked questions
The rules: federal law, Florida address
“Florida 1031 exchange rules” are the federal rules: Section 1031 applies identically in every state. Investment or business-use real property, a qualified intermediary in place before closing, 45 days to identify and 180 to close, value and debt replaced to avoid boot, Form 8824 at filing. You can sell in Florida and buy in any state, or sell anywhere and buy Florida — the state line matters only for the tax layer, the intermediary landscape, and the market itself. Florida's versions of all three reward attention.
The Florida tax picture (and the doc stamp everyone forgets)
No personal income tax means a Florida sale is taxed federally only: up to 20% long-term gains, 25% recapture, 3.8% NIIT — ~23.8% at the top, versus 30–37% in the high-tax states on the 50-state table. No state return, no state withholding, no clawback when you exchange out of Florida.
| On a $1,000,000 Florida sale ($550K gain, $220K depreciation) | Sell & pay tax | 1031 exchange |
|---|---|---|
| Florida state capital gains tax | $0 | $0 |
| Federal tax (recapture + LTCG + NIIT) | ~$141,540 | $0 now |
| Documentary stamp tax (seller, most counties) | $7,000 | $7,000 — exchange expense, no boot |
| Equity left working | ~$851,460 | $993,000 |
Illustrative; assumptions per our methodology — the calculator runs your exact numbers.
The line everyone forgets until the settlement statement: Florida's documentary stamp tax on deeds — $0.70 per $100 of price in every county but Miami-Dade (which runs $0.60 plus a surtax on some property). That's $7,000 on a $1,000,000 sale, customarily paid by the seller. It applies exchange or no exchange — it's a transfer tax, not a gains tax — and the good news is that as a standard closing cost of the sale it's treated as an exchange expense: payable from proceeds without creating boot. Budget it; don't fear it. If your replacement property is financed, note the state also stamps notes and mortgages — a real line item on leveraged purchases.
The Florida specialty: vacation-home conversions
Florida holds more second homes than any state, and most owners assume the beach condo is stuck outside §1031 because they use it personally. The IRS published the exit in Rev. Proc. 2008-16: in each of the two 12-month periods before the exchange, rent the home at fair market rent for 14+ days and keep personal use within the greater of 14 days or 10% of rented days — and the IRS won't challenge its status as investment property. In a state with year-round rental demand, two disciplined seasons is a low bar, and the payoff is deferral on what is often a family's largest embedded gain. The full conversion playbook — including the same safe harbor run in reverse — is in the primary residence guide; the short version is that the calendar and the rental records decide everything, so start the clock two years before the sale you're imagining.
The snowbird stack: exchange now, residence later
The long game that makes Florida unique: sell appreciated rentals up north, exchange into the Florida property you'd eventually like to retire in, operate it as a genuine rental for at least two years (2008-16 again, from the other side), then convert it to your primary residence. Two rules govern the endgame — property acquired in a 1031 must be held five years before the §121 exclusion can apply at all, and the exclusion is prorated for the rental years — but even prorated, the stack pairs deferral now with partial exclusion later, and Florida contributes its own sweeteners: no state income tax on everything else you earn, and homestead protection once it's your residence. Held to death instead, the deferred gain ends at the step-up. Sequencing is strict and personal-use during the rental years is the classic blown fact — the §121 + §1031 guide walks the whole corridor.
No QI law in Florida either
Like Texas — and unlike the nine states with licensing or bonding statutes — Florida does not regulate qualified intermediaries. No license, no minimum bond, no custody rule. Florida's exchange volume makes it home to both established independents (several verified firms in our directory are based in Naples and Fort Myers) and, historically, to some of the industry's failures. The response is the same six questions as everywhere: segregated dual-signature custody, written bond and E&O amounts, parent guaranty if any, tenure through 2008. The QI map marks which firms disclose what — and shades the states whose laws would have your back (Florida is unshaded on purpose).
The Florida market: what exchangers trade
Florida exchange flow is distinctive: heavy inbound money from northern sellers repositioning into no-income-tax retirement geography; coastal condos and single-family rentals trading on tourism income; multifamily across Tampa, Orlando, Jacksonville, and South Florida; net-lease retail on the growth corridors; and land along the I-4 spine. Florida-specific underwriting realities belong in any replacement-property decision — windstorm and flood insurance costs have moved cap rates, and condo assessments post-surfside reshaped that market. Owners who want Florida exposure without Florida operations increasingly land in DST interests holding Sun Belt property — the passive path the comparison guide prices against buying again.
Buying in from out of state
Selling elsewhere and buying Florida is the most common direction, and it's seamless federally — same clocks, same QI, any state to any state. Two notes. If the relinquished property is in California, its clawback follows you: annual FTB Form 3840 filings track the deferred California gain, collectible when you eventually sell taxably — Florida's 0% doesn't erase California's history (details in the California guide). And several other states (Massachusetts and Oregon among them) assert similar positions less formally — worth one CPA question when exchanging out of any high-tax state. Exchanging out of Florida, by contrast, drags nothing behind you.
Foreign owners: the FIRPTA layer
Florida's international ownership base means one more acronym at closings: FIRPTA requires buyers to withhold 15% of the price when purchasing U.S. property from a foreign seller. A foreign seller can do a 1031 exchange, but the withholding collides with the exchange unless handled in advance — typically via a withholding certificate (Form 8288-B) establishing the deferral before closing, with lead times of months, not weeks. If you're a foreign owner of Florida property considering an exchange, this is the first conversation with counsel, well before listing.