What Taxes Do You Pay When Selling a House in Florida?

Selling a home involves financial considerations beyond the sale price. Understanding the various taxes and adjustments associated with a real estate transaction is a crucial step for sellers. These obligations include federal taxes on potential profits, state-level fees, and local property tax prorations. Being prepared for these costs helps sellers estimate net proceeds and navigate closing.

Federal Capital Gains Tax Implications

When selling a primary residence, any profit from the sale may be subject to federal capital gains tax. A capital gain occurs when the selling price of an asset exceeds its adjusted cost basis. This gain is the profit the Internal Revenue Service (IRS) may tax.

Calculating this gain requires determining the property’s adjusted cost basis. The initial cost basis includes the original purchase price and acquisition costs like legal or recording fees. This basis is adjusted by adding capital improvements, such as a new roof or room addition, that add value. Depreciation, if applicable, would reduce the cost basis. The capital gain is calculated by subtracting the adjusted basis and selling expenses from the sale price.

The primary residence exclusion, also known as the Section 121 exclusion, allows eligible sellers to exclude a portion of their capital gain from federal taxation. To qualify, individuals must have owned and used the home as their main residence for at least two of the five years leading up to the sale date. This two-year period does not need to be consecutive.

The exclusion is up to $250,000 for single filers and $500,000 for married couples filing jointly. If the gain exceeds these amounts, the portion above the limit will be subject to long-term capital gains tax rates, assuming the property was held for more than one year. For 2025, these rates are 0%, 15%, or 20%, depending on the seller’s taxable income and filing status. Higher income individuals may also be subject to an additional 3.8% Net Investment Income Tax (NIIT).

This is a federal tax obligation. Florida does not impose a state income tax, so there is no state-level capital gains tax on the sale of a home in Florida. Even if the gain is fully excludable, sellers who receive a Form 1099-S, Proceeds From Real Estate Transactions, must still report the sale on their federal income tax return. IRS Publication 523, “Selling Your Home,” provides detailed guidance on these rules.

Florida Documentary Stamp Taxes

Selling a home in Florida involves the state-level Documentary Stamp Tax. This excise tax applies to documents that transfer an interest in Florida real property, with deeds being the most common example in a home sale. The tax is levied on the total consideration paid for the property.

For most Florida counties, the documentary stamp tax rate on deeds is $0.70 for each $100, or portion thereof, of the total consideration. For instance, a sale price of $300,000 would incur a tax of $2,100. In Miami-Dade County, the rate is $0.60 per $100 for single-family residences, with an additional surtax of $0.45 per $100 for other property types.

This tax is typically the seller’s responsibility in Florida, though the party paying can be negotiated within the purchase agreement. The closing agent, such as a title company or attorney, handles collection of this tax at closing. They then remit the funds to the Florida Department of Revenue.

Property Tax Prorations at Closing

Property taxes in Florida are paid in arrears, meaning the tax bill for a given year is due at the end of that year. This payment structure necessitates a financial adjustment between the buyer and seller at closing, known as proration. Proration divides the annual property tax liability based on the closing date.

The seller is responsible for property taxes up to and including the day of closing. The buyer assumes responsibility from the day after closing through the remainder of the tax year. This ensures that each party pays for the period during which they owned the property. For example, if a home closes on June 30th, the seller is responsible for taxes from January 1st to June 30th.

This adjustment is reflected on the closing disclosure statement. If the seller has not yet paid the property taxes for the current year, they will provide a credit to the buyer for their portion. The buyer then pays the full tax bill when it becomes due. Conversely, if the seller has prepaid taxes beyond the closing date, the buyer reimburses the seller for the unused portion. Closing agents handle these prorations to ensure an equitable distribution of the property tax burden.