What Florida Takes
The state's share of your gain is zero. Florida's constitution forbids a personal income tax, which is half the reason the moving trucks keep arriving, as we laid out in The Tax Math of Moving. The state's bite comes on the deed instead. Documentary stamps run 70 cents per hundred dollars of price in this county, and custom here puts them on the seller's side of the ledger. On a five million dollar closing that line reads $35,000. The stamps are a transfer cost rather than a tax on profit, and they apply whether you gained or lost. A contract can move them to the buyer, though custom rarely does.
What Washington Takes
The federal side starts with arithmetic most sellers underrate: the gain is price minus selling costs minus basis, and basis includes what the house cost plus every capital improvement since. The seawall, the new roof, the renovation that consumed a summer all raise basis and shrink the taxable gain, which is why the renovation file is a tax document. A primary residence then shelters $250,000 of gain for a single filer and $500,000 for a married couple. The price of the shelter is the use test: two of the last five years owned and lived in. Above it, long term gains in the top bracket pay 20 percent, and the 3.8 percent net investment income tax usually rides along at this price point. A home that spent years as a rental adds depreciation recapture at rates up to 25 percent on the depreciated slice.
The Two Surprises
The first surprise lands on foreign sellers. FIRPTA requires the buyer's side to withhold a share of the gross price at closing, commonly 15 percent, regardless of the actual gain. The withholding is a deposit rather than the final bill, and refunds follow the tax return, but the cash leaves at the closing table. Foreign owners should price that timing into their plans early, with counsel.
The second surprise is a pleasant one. Heirs who sell inherited property receive a stepped up basis, meaning the gain clock resets to the value at death. A family selling a long held estate often owes far less than the decades of appreciation suggest. Owners weighing a sale late in life sometimes serve their families better by waiting. That conversation belongs with an estate attorney, and it is one reason title structure matters, as we covered in Closing in the Name of a Trust. The right order of operations can be worth more than the right asking price. Both belong in the plan before the listing goes live.
Bottom Line
Florida takes nothing from the gain and seven tenths of a percent from the deed. Washington shelters half a million for a married couple, then takes up to 23.8 percent above it, with recapture for the rental years and withholding for foreign sellers. The sellers who do best treat the tax math as part of the pricing decision rather than a bill that arrives after the celebration.
For sellers planning the year: pull the improvement file before you price. Basis is the one number on the closing statement you can still change, and it only moves if you can prove it.
Anchors verified October 2026. Documentary stamps on deeds run 70 cents per 100 dollars outside Miami-Dade County, customarily paid by the seller in Palm Beach County. The Section 121 exclusion shelters 250,000 dollars of gain for single filers and 500,000 for married couples who meet the two of five year ownership and use tests. Top federal long term capital gains sit at 20 percent, with the 3.8 percent net investment income tax applying at high incomes. FIRPTA withholding is commonly 15 percent of the gross price for foreign sellers. This piece is orientation, not tax advice. Every sale runs with the client's own tax counsel.
Depreciation recapture applies only to periods the property was held for rental or business use.
Florida Department of Revenue documentary stamp tax schedules.
Internal Revenue Code Sections 121, 1445 and current IRS guidance, as summarized by practitioner sources.
