Selling an Investment Property in Florida: What Owners Need to Know
Selling a rental or investment property in Florida involves additional considerations beyond a standard home sale — capital gains tax, depreciation recapture, FIRPTA for foreign sellers, and 1031 exchange options all require advance planning.
Seller Guides · Sea to Sky Realty
Capital Gains Tax
When you sell an investment property at a profit, the gain is subject to federal capital gains tax. The rate depends on how long you have owned the property and your total taxable income.
- Short-term gain (held less than 1 year): taxed as ordinary income — up to 37% federal rate
- Long-term gain (held more than 1 year): 0%, 15%, or 20% federal rate depending on income level
- Florida has no state income tax — no additional state capital gains tax applies
Your gain is calculated as the net sale price minus your adjusted cost basis. The adjusted basis includes your original purchase price plus capital improvements, minus depreciation taken during ownership.
Depreciation Recapture
If you have claimed depreciation deductions during the rental period — as most investment property owners do — the IRS recaptures that depreciation upon sale at a flat 25% rate. This applies regardless of your income level or how long you held the property.
Depreciation recapture is one of the most commonly overlooked tax costs in investment property sales. On a property held for 10 years with $200,000 in accumulated depreciation, the recapture tax alone could be $50,000. Consult a qualified tax advisor well before listing.
The 1031 Exchange
A 1031 exchange — named after Section 1031 of the IRS code — allows you to defer capital gains tax by reinvesting the proceeds from the sale into a like-kind replacement property. To qualify:
- The replacement property must be identified within 45 days of closing
- The exchange must be completed within 180 days of closing
- A qualified intermediary must hold the proceeds — you cannot take constructive receipt of the funds
- The replacement property must be of equal or greater value to fully defer the gain
The 1031 exchange is one of the most powerful tax deferral tools available to US real estate investors. Foreign nationals can also use a 1031 exchange, though FIRPTA withholding rules still apply at closing unless a Withholding Certificate is obtained.
FIRPTA for Foreign Sellers
Foreign nationals selling US investment property are subject to FIRPTA withholding of 15% of the gross sale price. This is separate from — and in addition to — capital gains tax considerations. See our dedicated FIRPTA guide for full details, or contact us at info@bradentonbroker.com to discuss your specific situation.
Timing Your Sale
Investment property sales on the Gulf Coast are not uniformly distributed across the calendar year. Buyer activity peaks January through April during season, when the largest pool of motivated buyers — including cash buyers and investors — is present in the market. Listing during this window typically produces stronger offers and shorter time on market for investment properties.
Tenant Considerations
If your property is currently occupied by a tenant, the sale process requires coordination with the existing lease. In Florida, a fixed-term lease generally survives a sale — the new owner inherits the tenancy. Month-to-month tenants can be given notice in accordance with Florida law. We work with sellers to plan the listing timeline around existing occupancy.
How We Help
Sea to Sky Realty coordinates the full sale process for investment property owners — including FIRPTA planning, timing strategy, tenant coordination, and connection to qualified tax advisors experienced in cross-border transactions. Contact us at info@bradentonbroker.com to discuss your property.
Thinking About Selling Your Investment Property?
Tax planning, timing, and market positioning all matter. Let us walk you through the full picture before you list.