Capital gains on a home sale in Florida: what you owe and what you keep

Does Florida have capital gains tax on a home sale?

No. Article VII, section 5 of the Florida Constitution limits state taxes on the income of residents, and the Florida Department of Revenue states that Florida does not impose a personal income tax. Capital gains are income, so a Tampa homeowner who sells owes the state nothing on the profit.

That does not make a sale free. You still face federal tax on any gain above your exclusion, plus the ordinary costs of selling, which our guide on estimating net proceeds walks through line by line. If you move to another state, that state may tax a later sale differently, but this page covers a sale of a Florida home.

Sources: Florida Department of Revenue, personal income tax FAQ; Florida Constitution, Art. VII, s. 5.

Capital gains on a home sale: what 2025 and 2026 laws changed

Searches for "capital gains on home sale big beautiful bill" are common, so here is the plain answer after checking the primary sources on October 1, 2026.

• The home sale exclusion is unchanged. Section 121 of the Internal Revenue Code still reads $250,000, or $500,000 on a joint return. The text of the section as published in the U.S. Code shows no 2025 amendment, and IRS Publication 523 for 2025 returns repeats the same limits.
• The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) changed other individual tax rules, such as the standard deduction and a new deduction for seniors. It did not touch the home sale exclusion.
• Proposals to remove the caps exist but are not law. H.R. 4327, the No Tax on Home Sales Act (introduced July 2025), and H.R. 7034 (introduced January 13, 2026) would eliminate the dollar limits. Both were referred to the House Ways and Means Committee, and as of our last check neither had passed either chamber.

Treat any headline that says home sales are now tax-free as unverified until you see it in the Internal Revenue Code or an IRS publication. If a bill does pass, the effective date and the details will matter, and this page will be updated. The IRS publishes Publication 523 again each year, so check the edition for the year you sell.

Sources: 26 U.S.C. 121; IRS Publication 523 (2025); IRS, 2026 inflation adjustments and the One Big Beautiful Bill; govinfo, H.R. 7034 bill status.

The $250,000 and $500,000 exclusion, and the 2-of-5 test

Section 121 lets you leave gain out of your income if, during the five years ending on the sale date, you owned the home and used it as your main home for periods adding up to at least two years. The two years do not have to be consecutive, and the ownership and use periods do not have to be the same two years.

Notice the word gain. The $250,000 and $500,000 figures cap the profit you can exclude, not the sale price. A home that sells for $900,000 can produce no taxable gain if you bought it for $500,000 years ago and are within the limit.

Sources: IRS Publication 523; IRS Topic 701, Sale of your home; 26 U.S.C. 121.

How to figure your gain: basis, improvements and selling costs

Your taxable gain is not the sale price minus what you paid. The formula is the amount realized (the sale price less selling expenses) minus your adjusted basis.

1. Start with the purchase price plus settlement costs that were added to basis, from your original closing statement.
2. Add capital improvements. The IRS counts additions, new systems and exterior work such as a new roof, an addition, a pool or a replacement HVAC system. Ordinary repairs and maintenance do not count unless they are part of a larger remodel.
3. Subtract selling expenses from the sale price, such as commissions and closing costs on the sale.
4. Compare the result to your exclusion.

Owners of older Tampa houses who have lived there for decades often have thin records. Rebuild what you can: closing statements, permits, contractor invoices, bank records and insurance claims for storm repairs. Your CPA can tell you which items count. See our notes on preparing an older Tampa home to sell for where those records are often kept.

A worked example, with made-up numbers

This example is hypothetical. It uses round figures to show the method and is not a forecast for any home.

• Married couple filing jointly, both lived there: $445,000 is under $500,000, so none of the gain is taxed.
• One owner filing single: $445,000 minus $250,000 leaves $195,000 of taxable long-term gain. The federal rate on it depends on the rest of that year's taxable income, as the next section explains.

The same home looks very different on paper for a couple and for a widow or widower who sells after the two-year window, which is why the dates in the spouse section below matter.

What rate applies to gain above the exclusion

Gain on a home owned more than a year is long-term capital gain. The IRS describes rates of 0, 15 and 20 percent depending on your taxable income and filing status, and the dollar thresholds are adjusted every year, so look them up for the year you sell. Higher-income taxpayers may also owe the 3.8 percent net investment income tax on the taxable portion. A large taxable gain also adds to that year's income. Ask your tax preparer to model the year before you sign a contract.

Sources: IRS Topic 409, Capital gains and losses; IRS Publication 523.

Capital gains on a home sale after age 65

There is no age-65 exemption. Publication 523 contains no age-based exclusion, and the rule is the same at 55, 65 or 85. Many sellers remember an older, one-time exclusion for people over a certain age; the Taxpayer Relief Act of 1997 replaced that regime with the current two-of-five-year rule, which any age can use and which can be used repeatedly, no more than once every two years.

Age still shapes the outcome in practical ways. Long-time owners tend to have low basis and larger gain. A move into care, which can interrupt the "lived there" test, may qualify for a partial exclusion for health reasons if you owned and lived in the home for less than two of the last five years. And if one spouse has died, the surviving spouse rule below can restore the full exclusion.

Capital gains when buying another home: the rollover myth

For sales before May 7, 1997, section 1034 let owners defer gain by buying a replacement home that cost at least as much as the one sold. Congress repealed it in the Taxpayer Relief Act of 1997 (section 312) and replaced it with the exclusion above. People who remember the old rule sometimes assume that "buying down" or "buying up" still decides the tax.

It does not. A downsizer who sells a $900,000 home and buys a $450,000 condominium owes tax only if the gain exceeds the exclusion. A condo purchase does not create a deferral, and it does not erase a taxable gain either. If you are weighing the timing of the two transactions, read buying first or selling first, and use the homestead portability guide to see the separate property-tax benefit that does follow you to a new Florida home.

Sources: Congressional Research Service, The Taxpayer Relief Act of 1997: An Overview; IRS Publication 523.

Capital gains after a spouse dies

Two separate rules help a surviving spouse, and they work together.

The two-year window for the $500,000 exclusion

Publication 523 says a surviving spouse who has not remarried at the time of the sale may count the late spouse's time of owning and living in the home. The $500,000 limit remains available if the sale happens within two years after the date of death, and the other requirements (such as not having used the exclusion in the two years before) are met. After that window closes, the limit drops to $250,000 for a single filer.

The new basis on the deceased spouse's half

For a jointly owned home, the IRS says the basis of the interest your spouse owned becomes its fair market value on the date of death. Your own half keeps its old basis. This is often called a step-up and it usually lowers the gain.

Hypothetical: A couple's adjusted basis is $260,000. The home is worth $600,000 when one spouse dies. The deceased spouse's half moves to $300,000, and the survivor's half stays at $130,000. The survivor's new basis is $430,000. If the home sells for $620,000 with $40,000 of costs, the gain is $150,000, which falls within even a $250,000 exclusion. Get a date-of-death appraisal, since it is the document that supports the new basis.

If the surviving spouse needs to sell on a deadline, the timing questions in helping a parent downsize in Tampa apply to a widowed parent or a widowed partner alike.

Source: IRS Publication 523, surviving spouse and basis sections.

Selling an inherited home

For a home you inherit (other than from a spouse who owned jointly), the basis is its fair market value on the date of the owner's death, according to Publication 523. The gain you owe tax on is measured from that value, not from what the original owner paid. If the heirs sell soon after, there is often little or no gain. The exclusion for a main home does not apply unless the heir lived in it as a main home for two of the five years, so an heir who never moved in usually has no exclusion to use, only the stepped-up basis.

An appraisal from around the date of death is worth ordering early, and our guide on helping a parent downsize in Tampa covers the paperwork that tends to pile up at the same time. Estate and trust questions belong with a Florida-licensed attorney.

Form 1099-S and reporting the sale

The settlement agent may send you and the IRS a Form 1099-S showing the sale proceeds. The IRS says that if you receive one, you must report the sale even when the gain is fully excludable. You also report it if you cannot exclude all the gain. Gain that is not excluded is reported on Form 8949 and Schedule D. When all of the gain is excludable and you receive no 1099-S, reporting is generally not required, but keep your closing statement, improvement records and any date-of-death appraisal for at least as long as the return stays open.

Sources: IRS Topic 701; IRS Publication 523.

How to avoid capital gains on a home sale, legitimately

There is no loophole here, only the timing and records that the exclusion already rewards.

• Confirm the two years. Count 24 months of ownership and use inside the last five years before you sign a contract, not after.
• Rebuild your basis. Collect improvement invoices and the original closing statement.
• Mind the one-sale-per-two-years limit if you or your spouse used the exclusion recently.
• Watch rental history. Depreciation after May 6, 1997 is recaptured. Periods when a home was not your main home after 2008 can also reduce the exclusion.
• Plan the date after a death. The two-year window runs from the date of death, and a date-of-death appraisal supports the new basis.
• Check the year's rates and thresholds with a tax preparer if the gain will exceed the exclusion.

The tax is only one line of the picture. The Costs and Money guide and the step-by-step downsizing guide show where it fits, and the portability and net proceeds calculator adds the property-tax side. If the sale feels large against your plans, is downsizing worth it and reverse mortgage vs downsizing compare the other paths. The IRS also answers questions at irs.gov, and a CPA can run your actual numbers.

When you are ready to talk through a sale, you can request an introduction. Introductions go to agents on the operating team at eXp Realty, so this is not a search of the whole market, and the agent, not this site, handles the sale.