Florida has no state income tax, so a sale of appreciated real estate is taxed only at the federal level — still 23.8% on the gain. A 1031 exchange into a Delaware Statutory Trust lets Florida investors defer that federal tax and convert hands-on rentals into passive institutional real estate without giving up a third of the proceeds.
23.8%Est. combined tax if you sell
0%Top state rate on gains
5.0–6.5% multifamilyIllustrative cap rates
How Florida taxes a property sale
State treatment. No state income tax — capital gains are not taxed at the state level.
Nonresident withholding. None at the state level.
Does Florida conform to Section 1031?
Yes — a qualifying exchange defers state tax alongside federal.
Florida has no personal income tax, so a sale is taxed only federally; a 1031 exchange defers the federal 20% capital-gains rate plus the 3.8% net investment income tax.
Passive replacement property with a DST
Many Florida owners use a Delaware Statutory Trust as replacement property — institutional real estate, professionally managed, that qualifies for 1031 treatment and can absorb both the equity and the debt from the sale.
No. Florida has no personal income tax, so real estate capital gains aren't taxed at the state level. The federal bill — up to 23.8% on the gain — still applies and can be deferred with a 1031 exchange.
Why use a 1031 exchange in a no-income-tax state like Florida?
The federal tax on a large gain is significant on its own. A 1031 into a DST defers that federal tax and lets you exit active management for passive, institutional real estate.
Does Florida recognize 1031 exchanges?
With no state income tax to conform, federal 1031 treatment controls, and a qualifying exchange defers the federal gain in full.