1031 Exchange & DST Investing in Orlando, FL
Orlando is a leading tourism and hospitality market that has diversified into healthcare, technology, and logistics, with rapid population growth. Because Florida has no state income tax, a 1031 exchange faces no state-level capital-gains tax, and DSTs are available to accredited investors nationwide.
State tax treatment of a 1031 exchange
Capital-gains treatment is set at the state level, and Florida imposes no personal income tax. As a result there is no state capital-gains tax on a real estate sale and no state nonresident withholding, so a 1031 exchange in Orlando defers only federal tax on the gain. See our Florida state page for details.
Market snapshot
Orlando is best known as a global tourism and hospitality center anchored by Walt Disney World, Universal, and the convention corridor along International Drive, but its economy has broadened into healthcare, simulation and defense technology, and logistics. The Lake Nona Medical City has become a major life-science and healthcare cluster, while industrial demand has expanded along the SR-417, SR-429, and I-4 corridors serving Central Florida distribution. Multifamily and industrial are the leading investment asset classes, with residential activity spread across downtown, Lake Nona, and the fast-growing suburban rings.
Orlando ranks among the nation's leaders in population growth, and that in-migration has sustained one of the more active apartment construction pipelines in Florida. As new supply delivered, rent growth cooled and cap rates widened from cycle lows, though absorption has stayed comparatively strong on the strength of job and household formation. For 1031 investors, Orlando's demographic momentum, diversifying employment base, and no state income tax are why replacement capital continues to target the metro even as underwriting has grown more disciplined.
Why 1031 & DST investors look here
- Global tourism anchor diversifying into healthcare, technology, and logistics
- Among the nation's fastest-growing metros by population and household formation
- No state income tax and expanding Central Florida distribution demand
Replacement-property options
An investor selling in Orlando can defer gain by exchanging into DST interests, and the replacement property need not be in Florida; like-kind treatment applies to real estate anywhere in the United States. Delaware Statutory Trusts allow accredited investors to reinvest proceeds into professionally managed, institutionally sized assets, and a 721 UPREIT contribution or Qualified Opportunity Zone investment may suit some objectives. Suitability depends on individual circumstances and should be reviewed with qualified tax and financial professionals.
Frequently asked questions
Is Orlando a good market for a 1031 replacement?
Orlando offers rapid population growth and a diversifying economy beyond tourism, though recent apartment supply has moderated rent growth. Whether it suits a given exchange depends on your objectives and risk tolerance.
Does Florida tax a 1031 exchange?
Florida has no state income tax, so there is no state-level capital-gains tax on a property sale and no state withholding. A 1031 exchange in Orlando defers only federal tax on the gain.
Can I exchange Orlando property for out-of-state DSTs?
Yes. Like-kind real estate can be located anywhere in the United States, so Orlando sale proceeds can be exchanged into DSTs holding property in other states.
Gerald F. “Jerry” Baker, III — Founder & Managing Principal, Baker 1031 Investments · FINRA Series 22 / 63 · SIE. Read full bio →
State tax treatment is general and changes frequently; this page is educational and is not tax, legal, or investment advice. Confirm current state and local rules with your own CPA and attorney. Securities offered through Aurora Securities, member FINRA/SIPC. Real estate investments involve risk, including possible loss of principal.