Selling Your Homesteaded Home in Florida: What You Need to Know About Taxes

Seller Tips  |  Bryan Gold, FT Laud Homes

One of the biggest advantages of owning a primary residence in Florida is the Homestead Exemption. It lowers your property taxes while you live there — but what happens when you sell? Many homeowners are surprised to learn that selling a homesteaded property has both property tax and income tax considerations.

Property Taxes and the Homestead Exemption

Florida's Homestead Exemption reduces your home's assessed value by up to $50,000 for property tax purposes. It also locks in the "Save Our Homes" cap, which limits annual assessment increases to 3% or less.

When you sell your homesteaded property:

• Your exemption ends with that property.
• The buyer's assessed value resets to market value — which usually means their property taxes will be higher than yours were.
• If you buy another primary residence in Florida, you may be able to port (transfer) your accumulated Save Our Homes savings to the new home, reducing its assessed value and your future property taxes.

Learn more at the Broward County Property Appraiser website →

Federal Income Taxes: The IRS Exclusion

At the federal level, the IRS offers a major benefit when you sell your primary residence. If the home was your primary residence for at least two of the last five years, you may qualify to exclude up to:

• $250,000 of gain if you're single
• $500,000 of gain if you're married filing jointly

If your profit falls under those limits, you won't owe federal capital gains tax on the sale.

What About State Income Tax?

Here's the good news: Florida has no state income tax. Even if you have taxable gain above the IRS exclusion limits, you only need to worry about federal taxes — not state income tax.

Special Considerations

• Investment or rental use: If part of your home was used as a rental or for business, different rules may apply to that portion.
• Portability deadline: Three tax years from January 1 of the year you abandon the old homestead — and you must apply by March 1 of the year you claim it. It doesn't transfer automatically.
• Document your costs: Keep records of improvements and closing costs — they can reduce your taxable gain.

Bottom Line

Selling a homesteaded home in Florida comes with real tax advantages. You'll lose your exemption on the sold property, but portability lets you take your Save Our Homes savings with you when you buy again. And on the federal side, the primary residence exclusion helps many sellers avoid capital gains tax entirely.

If you're thinking about selling, talk with both a Realtor® and a tax professional before you list — the timing of your sale can affect what you keep.

This article is general information, not tax or legal advice. Consult a qualified tax professional about your specific situation.