1031 Exchange in Florida
A 1031 exchange in Florida runs on federal law: like-kind investment real estate, a qualified intermediary holding the proceeds, 45 calendar days to identify replacement property in writing, and 180 calendar days to complete the purchase. Florida does not change any of those rules.
Florida's contribution to the analysis is favorable and simple: the state has no personal income tax, so a completed exchange defers the federal capital gain with no state-level gain on top, and no state exchange election or filing exists.
Key points for Florida exchangers
- The identification and closing deadlines, like-kind standards, and boot rules are federal and apply identically in Florida.
- Florida imposes no personal income tax, so there is no state capital gains layer and no state clawback to track after your exchange.
- Florida does charge documentary stamp taxes on deeds when real estate transfers, and they appear on the closing statement like any other closing cost. Your closing agent calculates the exact figure; it is a transfer cost, not a tax on your deferred gain.
- Exchanging out of Florida into another state, or into Florida from elsewhere, is routine. If your relinquished property sits in a state with an income tax, that state's rules — including any clawback of deferred gain — deserve attention with your CPA.
- Florida investment property spans the same categories as the DST market generally: multifamily, net lease, medical, hospitality, storage, and more. Insurance costs and coastal exposure are underwriting questions worth asking about any Florida asset.
Exchanging into a DST from a Florida sale
Florida sellers can identify and close on Delaware Statutory Trust interests exactly as sellers elsewhere do: DST interests qualify as like-kind replacement property under IRS Revenue Ruling 2004-86, the financing is already in place so debt replacement does not depend on a new loan, and closings typically take days rather than months — useful when the 45-day clock is running.
Frequently Asked Questions
Does Florida withhold anything from my sale proceeds?
Florida has no state income tax withholding on real estate sales by U.S. persons. Federal FIRPTA withholding can apply when the seller is a foreign person; that is a federal rule, not a Florida one.
Do documentary stamp taxes break my exchange?
No. Transfer taxes are a closing cost, handled on the settlement statement like title and recording fees. They do not disqualify the exchange, though how closing costs are paid can affect boot — a detail to walk through with your qualified intermediary and CPA.
If I move my investment to Florida from a high-tax state, does the old state let go of the deferred gain?
It depends on the state you are leaving. Some states track exchanged gain that originated there and tax it when the deferral ends. Florida will not tax it, but the origin state might. Ask your CPA before assuming the gain has escaped.
Disclosures
This page is general educational information about federal and Florida treatment of like-kind exchanges. It is not tax, legal, or investment advice, and state and federal rules change. Securities offered through Aurora Securities, Inc. (ASI), CRD #46147, SEC #8-51322, member FINRA/SIPC. Gerald F. "Jerry" Baker, III is a registered representative of ASI (FINRA CRD #7537416). Baker 1031 Investments, LLC is independent of ASI. Confirm the treatment of your specific transaction with your CPA and attorney before acting.