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.
The Florida tax math
Here's the tax stack on a long-held rental sold for a $1.5M gain (excludes depreciation recapture, taxed separately at up to 25%):
| On a $1.5M gain | Tax |
|---|---|
| Federal long-term capital gains (20%) | $300,000 |
| Net investment income tax (3.8%) | $57,000 |
| Florida state tax | $0 |
| Total if you simply sell | $357,000 |
| Tax if you 1031 into a DST | $0 deferred |
Even with no Florida income tax, the federal bill on a large gain is real — $357,000 on a $1.5M gain — versus $0 now with a qualifying exchange. Run your Florida numbers →
Florida 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
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.
Withholding at sale
None at the state level.
How gains are taxed
No state income tax — capital gains are not taxed at the state level.
Florida market snapshot
Illustrative — wire to a market-data feed; refreshed quarterly.
Baker 1031 in Florida
Realized (acquired, held, sold) programs on Florida assets. Joined from full-cycle-deals.csv; sponsor-reported, net-to-investor, not independently verified; past performance ≠ future results.
| Program | Sponsor | Avg annual | Equity × | Hold |
|---|---|---|---|---|
| Applebee's — Destin | AEI | 9.24% | 1.88x | 10.95 yr |
| Applebee's — Temple Terrace | AEI | 10.24% | 2.58x | 14.19 yr |
| Dollar General – Winter Haven, FL — Winter Haven | Four Springs | 7.70% | 1.14x | 1.84 yr |
| Dollar General – Fort Braden, FL — Fort Braden | Four Springs | 7.00% | 1.07x | 1.05 yr |
| Dollar General – Pensacola, FL — Pensacola | Four Springs | 7.00% | 1.06x | 0.86 yr |
| CVS — Weeki Wachee | Syndicated Equities | 8.22% | 2.21x | 10.04 yr |
| Hampton Inn – Okeechobee, FL — Okeechobee | Peachtree Group | 207.10% | 2.18x | 0.71 yr |
| Hyatt Place – Jacksonville, FL — Jacksonville | Peachtree Group | 20.70% | 1.97x | 3.7 yr |
See every Florida deal in the Data Center →
Current offerings for Florida investors
| Offering | Sponsor | Type | Status |
|---|---|---|---|
| Blue Door Property II, DST | SmartStop | Self-Storage | Available |
| Blue Door Property III, DST | SmartStop | Self-Storage | Available |
| BR Diversified Industrial Portfolio 7, DST | Bluerock | Industrial | Available |
| Florida Growth 2 - Jubilee 1 DST | Walton Global Holdings | Land | Available |
| NexPoint Oasis DST | NexPoint | Multifamily | Available |
| NexPoint Small Bay III DST | NexPoint | Small Bay Industrial | Available |
DST sponsors based in Florida
Learn more
Florida FAQ
Does Florida tax capital gains?
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.
Disclosures
This page is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. State tax and 1031 rules summarized here are general, current as of 2026, and not tax advice — verify with your CPA and attorney. For accredited investors only. Representatives may transact business only in states where registered or exempt. Securities offered through Aurora Securities, Inc., member FINRA/SIPC; Baker 1031 Investments, LLC is independent of Aurora. Performance shown is sponsor-reported, realized programs only, net of fees, not independently verified, and not indicative of future results.