Tax on an Investment Property Sale in Florida Now

Understanding Capital Gains Tax on an Investment Property Sale: Florida Investor’s Guide

Miami – October 3, 2025: Selling an investment property in Florida — whether it’s a short-term rental in Orlando (32801), a multifamily unit in Miami (33132), or a beachfront condo in Tampa (33602) — often brings healthy profits. However, without understanding capital gains tax on an investment property sale, investors risk giving away more of their profits to the IRS and the Florida Department of Revenue than necessary.

This guide will break down what capital gains tax is, how it applies in Florida, and how investors can reduce or defer their tax obligations. We’ll also show how strategic financing with GHC Funding can help investors maximize after-tax returns.

Florida Investor’s Guide

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What is Capital Gains Tax on an Investment Property?

Capital gains tax applies when an investment property is sold for more than its adjusted basis. The IRS separates gains into two categories:

• Short-Term Capital Gains – Properties held for less than one year; taxed at your ordinary income rate (10%–37%).
• Long-Term Capital Gains – Properties held longer than one year; taxed at 0%, 15%, or 20%, depending on income.

Florida does not impose a state income tax on individuals. However, federal capital gains tax and depreciation recapture still apply, which can significantly reduce net profits.

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How Capital Gains Are Calculated

1. Adjusted Basis = Purchase Price + Improvements – Depreciation Taken
2. Net Sales Price = Sale Price – Selling Expenses (commissions, closing costs, legal fees)
3. Capital Gain = Net Sales Price – Adjusted Basis

Example:

• Purchase price: $350,000
• Improvements: $25,000
• Depreciation taken: $40,000
• Adjusted basis = $335,000
• Sale price: $500,000
• Selling expenses: $20,000
• Net sales price = $480,000
• Capital gain = $145,000 (taxable)

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Strategies to Reduce or Defer Capital Gains Taxes

1. 1031 Exchange

Allows investors to defer taxes by reinvesting sale proceeds into another “like-kind” property. For example, selling a Miami duplex and rolling proceeds into a Tampa multifamily building preserves capital.

2. Opportunity Zones

Florida has designated Opportunity Zones in cities like Jacksonville, Orlando, and Miami. Investing here can defer and even reduce capital gains tax obligations.

3. Depreciation Recapture Planning

When you sell, the IRS requires repayment of depreciation benefits, taxed up to 25%. Planning ahead with cost segregation studies may help manage this liability.

4. Primary Residence Exclusion

If you lived in the property for two of the past five years, you may exclude up to $250,000 ($500,000 for married couples) in gains from taxes.

5. Smart Refinancing with GHC Funding

Rather than selling, investors can refinance using DSCR loans, SBA 7a/504, or bridge loans from GHC Funding to pull equity tax-free, deferring capital gains events while continuing to earn rental income.

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Current Market Insights for Florida Investors (as of October 2025)

Interest Rates:

• DSCR Loans: 6.15% – 8.5%
• SBA 7a Loans: Prime + 2.75% (~11.25%)
• SBA 504 Loans: 6.65% – 7.35% fixed
• Bridge Loans: 9% – 11%

Requirements:

• DSCR: 1.0–1.25 minimum
• LTV: Up to 80%
• Ownership: LLCs, corporations, trusts allowed
• Property Types: SFRs, multifamily, short-term rentals, mixed-use

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Geo-Targeting: Florida Investment Opportunities

• Miami (33132, 33139): Strong appreciation, international buyers, luxury condos.
• Orlando (32801, 32819): High demand for vacation rentals near theme parks.
• Tampa (33602, 33606): Multifamily investments tied to economic expansion.
• Jacksonville (32202, 32256): Growth in logistics, affordable rentals, Opportunity Zones.
• Fort Lauderdale (33301): Popular waterfront and tourism-driven properties.

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External Resources for Florida Investors

• Florida Real Estate Commission (FREC) – Licensing and regulations
• Florida Department of Revenue – Tax obligations and filing resources
• Florida Realtors Association – Statewide market trends and resources
• Miami Association of Realtors – South Florida-specific data
• Enterprise Florida – Economic development and Opportunity Zone info

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Q&A: Understanding Capital Gains Tax on an Investment Property Sale

Q1: Do I owe Florida state taxes on capital gains?
A: No. Florida does not levy a state income tax, but federal capital gains still apply.

Q2: Can I completely avoid capital gains tax?
A: You may defer it with a 1031 exchange or reduce it through Opportunity Zone investments, but outright avoidance is rare.

Q3: What is depreciation recapture?
A: It’s the IRS reclaiming tax savings you previously received from depreciation, taxed at up to 25%.

Q4: Does owning in an LLC change capital gains tax?
A: No. LLCs provide liability protection but do not alter capital gains tax treatment.

Q5: Can refinancing trigger capital gains tax?
A: No. Refinancing with lenders like GHC Funding allows you to extract equity tax-free.

Q6: How does the IRS treat vacation rentals vs. long-term rentals?
A: Both are investment properties, so capital gains tax rules apply equally.

Q7: Should I sell or refinance in Florida’s current market?
A: Many investors are choosing to refinance to avoid triggering taxable events while benefiting from rental cash flow.

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Why GHC Funding is the Go-To Lender

• Flexible Financing: DSCR loans with no income verification, SBA programs, and bridge loans.
• Investor-Centric Approach: Focused on cash-flow-based approvals.
• Florida Expertise: Tailored solutions for Miami, Tampa, Orlando, and Jacksonville markets.
• Streamlined Process: Faster approvals and access to capital than traditional banks.

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Final Thoughts

Understanding capital gains tax on an investment property sale is critical for Florida real estate investors. By leveraging strategies like 1031 exchanges, Opportunity Zone investments, and smart refinancing with GHC Funding, you can maximize returns and reduce tax liabilities.

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Call to Action

👉 Ready to protect your profits and grow your Florida real estate portfolio?
Visit GHC Funding or call 833-572-4327 today to explore DSCR loans, SBA 7a/504 financing, bridge loans, and alternative real estate funding solutions tailored for investors like you.

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Download Capital Gains Tax Planning Checklist (PDF) for Florida investors: