1031 Exchange in Florida

By Skyline Capital Investments · Updated October 26, 2026 · 6 min read

Does Florida recognize 1031 exchanges?

Yes, in practice. A Florida 1031 exchange works exactly like a federal one for individuals, because Florida has no personal income tax for an exchange to defer, so there is no Florida return, no state exchange form and no state withholding. For corporations, Florida follows the federal result, because the Florida corporate income tax starts from federal taxable income. A gain deferred on the federal return stays out of the Florida corporate base.

That makes Florida one of the simplest states for an exchange. The hard parts are the federal ones: the 45-day identification, the 180-day closing, the qualified intermediary and the rule that you must buy at least as much as you sell and reinvest all the cash to defer all the tax.

Federal 1031 rules every Florida exchange follows

Every Florida exchange must meet Section 1031 of the Internal Revenue Code and Treasury Regulation 1.1031(k)-1. The table recaps the core rules. The guides on 1031 exchange rules and the 1031 exchange hub cover them in depth, including boot, related parties and reverse exchanges.

Florida withholding and how an exchange affects it

Florida requires no income tax withholding when you sell real estate, whether you live in Florida or not, so an exchange has no Florida withholding to waive. Sellers from states such as California, which withholds on its own real estate sales, sometimes expect a Florida form at closing. There is none.

Federal FIRPTA withholding is different. A foreign seller of Florida property generally has 15% of the amount realized withheld under Internal Revenue Code section 1445, even in an exchange, unless the IRS issues a withholding certificate that reduces it. Foreign owners planning a Florida exchange should apply for the certificate early, because the 45 and 180-day clocks do not wait for it.

Documentary stamp tax in a Florida 1031 exchange

A 1031 exchange does not defer Florida’s documentary stamp tax, because it is a tax on recorded deeds, not on income. Under section 201.02 the rate is 70 cents per $100 of consideration, or 0.70%, in every county except Miami-Dade, which charges 60 cents plus a 45-cent surtax on property that is not a single-family residence, for 1.05% on an apartment building.

Each Florida deed in the exchange is a separate transfer. The deed of your relinquished property carries stamps on its price, and if the replacement is also in Florida, its deed carries stamps on its own price. The Department of Revenue counts any mortgage on the property as consideration whether or not it is assumed, and says all parties are liable for the tax regardless of which one agreed to pay it.

Deed stamps are an exchange expense. Paid from the exchange funds at closing, they reduce your amount realized rather than creating boot, but ask your intermediary how they will treat each closing cost.

Is there a 1031 clawback in Florida?

No. Florida has no clawback rule, so if you sell Florida property, exchange into property in another state and later sell that property, Florida never taxes the deferred gain. Four states do track gain that leaves them: California, Massachusetts, Montana and Oregon. Florida is not one of them, and an individual owner has no Florida income tax that could be clawed back.

The reverse is the issue to watch. An owner who exchanges a California building into Florida still owes California tax on the deferred California gain when the Florida replacement is sold in a taxable sale, and must file California Form 3840 each year until then. Moving to Florida does not end that obligation.

Does Florida regulate qualified intermediaries?

Florida is not on the list of states with qualified intermediary laws. Nine states regulate exchange intermediaries by statute: California, Colorado, Connecticut, Idaho, Maine, Nevada, Oregon, Virginia and Washington. In those states the law adds rules such as bonding, insurance or segregated accounts.

In Florida, your protection comes from the federal rules and your exchange agreement. Ask the intermediary to hold your funds in a separate account in your name or under your tax ID, to require your written approval for every disbursement, and to show proof of fidelity bond and errors and omissions coverage. Florida title companies and attorneys often refer clients to intermediaries, but the choice and the vetting are yours.

Common Florida 1031 exchange paths

Florida exchanges fall into a few patterns, and the state rules differ for each.

• Florida to Florida: an individual owner files only federal Form 8824. Deed stamps apply on both deeds.
• Florida to another state: no Florida tax or clawback. The new state taxes the gain only if it taxes income and only when you sell there, under its own rules.
• Another state into Florida: your home state’s rules still apply to the gain you bring. California sellers keep filing Form 3840; Massachusetts, Montana and Oregon also track the gain.
• Corporate owners: report the federal deferral on the Florida corporate return, and the deferred gain stays out of Florida’s 5.5% corporate base.
• Into a Delaware statutory trust: a common path for owners who want to stop managing property; the 1031 exchange DST guide covers it.

Florida timeline tips: hurricane season and closings

Plan for hurricane season, which runs from June through November, when you schedule a Florida exchange. A storm can delay inspections, insurance binding and lender funding on a replacement property in the final weeks of the 180-day period. When a hurricane leads to a federal disaster declaration, the IRS often postpones 1031 deadlines for taxpayers in the covered counties under Revenue Procedure 2018-58, but only if the IRS issues relief for that event and your situation fits it.

Insurance is the other Florida delay. Lenders will not fund without a binder, and coastal apartment buildings can take weeks to quote. Ask for insurance quotes on each identified property before day 45, not after.

Partial exchanges and boot for Florida sellers

Boot in a Florida exchange is taxed by the IRS only. If you keep some of the cash or take on less debt than you paid off, the gain is taxable up to the amount of that boot, and Florida adds nothing for an individual owner. For a C corporation, recognized boot flows into federal taxable income and then into the Florida corporate base at 5.5%, after the $50,000 exemption if it has not already been used.

Take the couple in the example below. If they bought a $1,700,000 replacement and kept $200,000 of the proceeds, the $200,000 would be taxable boot. Treating it as depreciation recapture taxed at their 22% and 24% brackets, the federal income tax is $46,772, and the net investment income tax adds $5,024 because their modified adjusted gross income rises to $382,200, for about $51,796 in total. The other $900,000 of gain stays deferred.

Many Florida sellers use a partial exchange on purpose: they take some cash to pay down other debt or fund a reserve and accept the federal tax on it. Since there is no state tax on top, the cost of that cash is lower in Florida than in most states. Talk through the trade-off with your CPA before you set the replacement price.

Example: a Florida 1031 exchange on a $2M building

A married couple sells an Orlando apartment building for $2,000,000 and exchanges into a $2,600,000 Jacksonville building. Their adjusted basis is $800,000 after $400,000 of depreciation, and selling costs are $100,000, including $14,000 of deed stamps, so the gain is $1,100,000.

Sold outright, the federal tax would be about $272,276, assuming $150,000 of other taxable income: $96,237 on the depreciation recapture, $136,815 on the long-term gain and $39,224 of net investment income tax. Florida would add nothing. Through a full exchange, reinvesting all $1,900,000 of net proceeds and taking on new debt for the rest, the couple defers the full federal amount.

The Jacksonville deed carries $18,200 of stamps (0.70% of $2,600,000), and the contract decides who pays it. If the replacement were in Miami-Dade, the stamps would be $27,300 at the combined 1.05% rate. Their basis in the new building is $1,500,000: the $2,600,000 price less the $1,100,000 deferred gain.

Selling Florida apartments inside a 1031 timeline

Skyline buys apartment buildings with five or more units in Florida. We buy directly, close on your timeline, and can work inside 1031 deadlines, which gives you a firm closing date to plan your identification around.

Related guides cover Florida capital gains tax, the property tax rate in Florida and Florida landlord-tenant law. The 1031 exchange calculator estimates the tax you would defer.