Does Florida tax my capital gain when I sell a Miami condo from out of state?

No. Florida has no personal income tax, so no Florida state tax applies to the gain regardless of where the seller lives. However, your home state — if it imposes income tax — generally taxes its residents on worldwide income including the Miami gain. California, New York, New Jersey, Illinois, and Oregon all tax the full gain at their state rate.

What is the federal capital gains rate on a Miami condo I sell as a non-Florida resident?

For property held more than 12 months, the federal long-term capital gains rate is 15% for most middle-bracket sellers and 20% for high earners above roughly USD 553K single or USD 622K married taxable income. The 3.8% Net Investment Income Tax adds on top for taxpayers above USD 200K single or USD 250K joint MAGI. Total federal rate for most absentee sellers lands at 18.8% or 23.8%.

Can I use the Section 121 primary residence exclusion on my Miami condo?

Almost never if you are an out-of-state owner. Section 121 requires you to have owned and used the property as your principal residence for at least 2 of the 5 years before sale. Vacation use, seasonal use, and occasional weeks per year do not count. Most absentee owners fail the use test.

Do I owe depreciation recapture on a Miami condo I once rented out?

Yes. If you rented the unit at any point, the IRS recaptures depreciation taken or allowable at a 25% federal rate at sale. This applies even if you never claimed the depreciation on your prior returns. The recapture is calculated on the lesser of total depreciation taken or allowable, or the actual gain.

Do I need to make estimated tax payments after closing on my Miami condo?

Usually yes. A large capital gain can push your total tax beyond the safe-harbor amounts and trigger underpayment penalties. Most out-of-state sellers need to make a federal estimated payment and a home-state estimated payment in the quarter of the sale. Coordinate with your CPA before closing rather than after.

How do I prove my cost basis if I bought the condo a long time ago?

Start with the original closing statement (HUD-1 or ALTA Settlement Statement) from your purchase. Then pull invoices, contractor receipts, and credit card statements for any documented capital improvements — kitchen remodel, HVAC replacement, hurricane shutters, flooring. Cosmetic repairs do not count; capital improvements do. Pull these records 6 to 12 months before listing.

FAQ · OUT-OF-STATE CONDO SELLERS

Capital Gains on a Miami Condo Sale When You Live in Another State

If you are a US citizen or resident living somewhere other than Florida — New York, California, New Jersey, Illinois, Texas, anywhere — and you are selling a Miami condo, the tax picture is different from what most generalist agents will tell you. Florida has no state income tax, so people assume the sale is essentially federal-only. For most out-of-state owners that is wrong. Your home state taxes you on your worldwide income, including the Miami gain.

This article walks through the actual federal capital gains math, when the Section 121 primary-residence exclusion applies (and why most absentee owners do not qualify), how depreciation recapture works if you ever rented the unit, and how home-state taxation lands on top of all of it. The worked example uses a New York resident selling a Brickell condo, but the framework applies to any state that taxes capital gains.

Quick answer (the 90-second version)

Federal long-term capital gains on the sale of a Miami condo are taxed at 15% or 20% depending on your income, plus the 3.8% Net Investment Income Tax for high earners. Section 121’s $250K/$500K primary-residence exclusion almost never applies to absentee owners because they do not meet the 2-out-of-5-year use test. If you ever rented the unit, the depreciation you took (or should have taken) is recaptured at 25%. Florida imposes no state tax on the gain, but your home state generally does — California, New York, New Jersey, Illinois, and Oregon all tax their residents on the full gain from a Florida property sale.

Federal long-term capital gains rate: 15% for most middle-bracket sellers; 20% if taxable income exceeds roughly USD 553K single / USD 622K married (2026 thresholds, indexed).
NIIT: additional 3.8% on net investment income for high earners (over USD 200K single / USD 250K joint MAGI).
Section 121 exclusion: USD 250K (single) / USD 500K (joint) of gain excluded if the unit was your primary residence for at least 2 of the 5 years before sale. Most absentee owners fail this test.
Depreciation recapture: 25% federal rate on the depreciation taken or allowed during any rental period. This applies even if you never actually claimed it.
State tax on the gain: Florida — none. Your home state — usually yes, at your home-state rate (CA 13.3%, NY 10.9%, NJ 10.75%, etc.).
1099-S: the closing agent reports the gross sales price to the IRS on Form 1099-S. The sale will be on the IRS’s radar whether you file it or not.

If you take one thing from this article: do not assume the lack of Florida state tax means the sale is cheap. A California resident selling a USD 1.2M Brickell condo for a USD 600K gain can land at a combined federal-plus-state tax bill north of USD 200K. Plan the math before you list, not after.

1. How does federal long-term capital gains tax actually work on a Miami condo sale?

For a US tax resident — meaning citizen, green-card holder, or anyone meeting the substantial presence test — the sale of a Miami condo held more than 12 months is a long-term capital gain taxed at preferential federal rates:

0% on the portion of gain that falls within the lowest income brackets (rare for anyone selling a Miami condo)
15% for the typical middle and upper-middle-income seller — most absentee sellers land here
20% for high earners above roughly USD 553,000 single / USD 622,000 joint of taxable income (2026 thresholds, indexed annually)

The gain itself is calculated as:

Sales price – selling costs – adjusted cost basis = capital gain

Selling costs are real estate commission, title fees, transfer taxes, attorney fees, and any other documented closing costs. Adjusted cost basis is original purchase price + documented capital improvements – depreciation taken (or allowable, if you rented the unit).

If you held the property 12 months or less, the gain is short-term and taxed at ordinary income rates (up to 37%). This is rare for absentee sellers but not unheard of for inherited or recently-acquired units.

2. What is the Net Investment Income Tax (NIIT) and will it apply to me?

The Net Investment Income Tax is an additional 3.8% federal surtax on investment income — including capital gains from real estate sales — for taxpayers above income thresholds:

USD 200,000 modified adjusted gross income (MAGI) for single filers
USD 250,000 MAGI for married filing jointly
USD 125,000 MAGI for married filing separately

If your MAGI exceeds the threshold, the 3.8% applies to the lesser of (a) your net investment income or (b) the amount by which your MAGI exceeds the threshold. For most absentee Miami sellers — who tend to be high earners with significant taxable income — the full gain gets hit with the 3.8%.

That means a typical absentee seller in the 20% LTCG bracket faces a federal rate of 23.8% on the gain (20% + 3.8% NIIT). A seller in the 15% LTCG bracket above the NIIT threshold faces 18.8%. Plan the math at the higher rate unless your CPA confirms otherwise.

3. Does the Section 121 primary-residence exclusion apply to my absentee Miami condo?

Almost certainly not, and this is where many out-of-state sellers get it wrong.

Section 121 of the Internal Revenue Code lets you exclude up to USD 250,000 of gain (USD 500,000 if married filing jointly) on the sale of your primary residence — if you owned and used the property as your principal residence for at least 2 of the 5 years immediately before the sale.

The “use” test is the one that kills it for most absentee owners. Use means actual physical occupancy as your principal home — not vacation use, not seasonal use, not a few weeks a year. The IRS looks at where you voted, registered to drive, banked, worked, and filed state taxes.

A Brickell condo that you visit four weeks a year while living in New York is not your primary residence. A Coconut Grove condo your kids stay in over winter break is not your primary residence. A Bal Harbour condo you rented to others and used occasionally is not your primary residence.

Where Section 121 can apply:

You actually moved to Miami for two-plus years and made it your principal home before selling.
You inherited the condo from a spouse who lived in it as a primary residence (special rules — get CPA advice).
You meet a partial exclusion under one of the hardship safe harbors (change of job, health, unforeseen circumstances).

The math on a partial exclusion is mechanical: months of qualifying use divided by 24, multiplied by the full exclusion. A 12-month qualifying use under a hardship safe harbor would give a single filer USD 125,000 of exclusion.

For the typical absentee seller — owning a Miami condo while domiciled elsewhere — assume Section 121 does not apply. Confirm with your CPA before assuming otherwise.

4. What happens with depreciation recapture if I rented the unit?

If you ever rented the Miami condo — even short-term on Airbnb during the COVID years — depreciation enters the picture, and it does not go away just because you stopped renting.

Residential rental real estate is depreciated over 27.5 years on a straight-line basis. The IRS rule is “depreciation taken or allowed” — meaning if you rented the unit and should have depreciated it on your Schedule E, the IRS will still recapture the allowable depreciation at sale even if you never claimed it. This is the trap.

The recapture rate is 25% (the “unrecaptured Section 1250 gain” rate). It applies to the lesser of (a) the depreciation taken or allowable, or (b) the actual gain on sale.

Worked numbers. You bought a Brickell condo for USD 600,000 in 2017, rented it for three years (2018-2020), then stopped renting and let it sit until selling in 2027 for USD 1,200,000.

Approximate depreciable basis (excluding land, assume USD 100K land): USD 500,000
Annual depreciation: USD 500,000 / 27.5 = USD 18,182
3 years of depreciation taken or allowable: USD 54,546
At sale, USD 54,546 of the gain is recaptured at 25% = USD 13,636 federal tax
Remaining gain (USD 1.2M – 600K – 54.5K = USD 545.5K) taxed at long-term capital gains rates

If you rented the unit but skipped depreciation entirely on your prior returns, you still owe the recapture at sale, and you have lost the deductions you could have taken. The fix is to amend prior returns or file Form 3115 to claim a catch-up — talk to a CPA the year before you list, not after.

5. Does Florida tax the gain? Does my home state?

Florida: no. Florida has no state personal income tax. No Florida tax applies to the gain on a Miami condo sale, whether you live in Florida or elsewhere. There is no Florida non-resident withholding equivalent to FIRPTA.

Your home state: usually yes. US states that impose income tax generally tax their residents on worldwide income, including capital gains from out-of-state real estate. You file the gain on your home-state return, pay home-state tax on it, and Florida is not in the picture at all.

The states that do not tax capital gains: Alaska, Florida, Nevada, New Hampshire (interest/dividends only on the way out), South Dakota, Tennessee, Texas, Washington (has a separate 7% capital gains tax above USD 270K but real estate sales are excluded), Wyoming. If you live in one of these, the federal side is the whole story.

The states that do tax capital gains as ordinary income and will hit your Miami sale hard:

California — top rate 13.3% (and the 1% mental-health surcharge above USD 1M)
New York — top state rate 10.9%, plus NYC residents add 3.876% city tax
New Jersey — top rate 10.75%
Hawaii — top rate 11%
Oregon — top rate 9.9%
Minnesota — top rate 9.85%

Most other income-tax states fall between 4% and 7%.

There is no credit on your home-state return for federal tax paid, but there is also no offsetting Florida tax to credit. The home-state tax is additive on top of the federal bill.

One exception worth flagging: if you moved out of a high-tax state during the same tax year as the sale, the residency-allocation rules in your former state can pull the gain into their tax base regardless. New York and California are aggressive on this. Moving from Manhattan to Miami in October and closing in November does not automatically save you New York state tax on the gain.

6. What is Form 1099-S and how does it interact with my return?

Form 1099-S — Proceeds From Real Estate Transactions — is filed by the closing agent (title company, attorney, or settlement agent) and reports the gross sales price of the transaction to the IRS. You receive a copy at or shortly after closing.

The 1099-S does not calculate your gain or tax. It just tells the IRS the gross price. The IRS matches that against your tax return; if you do not report the sale, you will get a CP2000 notice within 12-18 months proposing tax on the full gross sales price (with zero basis, zero costs).

Two practical points:

If the sale qualifies for the full Section 121 exclusion and you sign a written certification at closing, the closing agent may be relieved of the 1099-S filing requirement. This is rare for absentee sellers. Assume the 1099-S will be filed.
The 1099-S reports gross sale price, not net. The IRS does not see your costs or basis until you file Schedule D and Form 8949 reporting the sale.

Keep the 1099-S with your closing documents. Your CPA will need it.

7. Do I owe estimated tax payments on the gain?

Maybe. The federal estimated-tax safe harbor rules say you avoid an underpayment penalty if your total withholding and estimated payments for the year equal either:

100% of your prior-year tax (110% if AGI > USD 150K), or
90% of your current-year tax

A large capital gain mid-year can blow past those numbers and trigger a penalty. The fix is either an estimated payment in the quarter of the sale or increased withholding from another income source. For most absentee Miami sellers selling a USD 800K-1.5M condo, this means writing a check to the IRS in the quarter after closing.

Your home state generally has parallel rules. California, New York, and New Jersey all impose estimated-payment penalties if state safe harbors are missed.

This is the single most-skipped tax-planning item I see on out-of-state seller deals. Sellers focus on the closing wire and forget that another check is due to the IRS within 90 days. Coordinate with your CPA before closing.

8. Worked example: New York resident selling a $1.2M Brickell condo

NY tax-resident, US citizen, bought a Brickell condo in 2014 for USD 600,000 as a vacation home, never rented. Sells in May 2027 for USD 1,200,000.

Facts:

Purchase price: USD 600,000
Documented capital improvements (kitchen, two HVAC replacements): USD 45,000
Selling costs (commission, title, doc stamps): USD 80,000
Sales price: USD 1,200,000
No depreciation (never rented)
Section 121 does not apply (never primary residence)
Filer is married, joint AGI USD 850,000 — above NIIT threshold and in 20% LTCG bracket

Federal calculation:

Adjusted basis: USD 600,000 + 45,000 = USD 645,000
Capital gain: USD 1,200,000 – 80,000 – 645,000 = USD 475,000
Federal LTCG at 20%: USD 95,000
NIIT at 3.8%: USD 18,050
Federal total: USD 113,050

New York state calculation:

New York taxes the full capital gain at ordinary income rates
At top NY state rate of 10.9%: USD 51,775
NYC resident? Add 3.876% = USD 18,411
NY total (assuming NYC resident): USD 70,186

Combined federal + state: USD 183,236 on a USD 475,000 gain.

That is 38.6% of the gain to the tax authorities. Net to the seller after tax: USD 291,764 on top of the original USD 600K basis return, for a wire-to-bank-account result of approximately USD 1,016,950 of the USD 1.2M headline.

If the same owner had rented the unit for the three years 2018-2020 (let’s say USD 50,000 of depreciation taken or allowable), add USD 12,500 of federal recapture and approximately USD 6,800 of additional NY tax. Combined climbs to roughly USD 202,500.

Different state, different result. The same sale by a Houston resident (no Texas state income tax): only the USD 113,050 federal portion applies. The state-tax difference between NYC and Houston on this single transaction is roughly USD 7

9. Common mistakes

Assuming “Florida has no tax” means no state tax. Florida has no tax on its residents. Your home state taxes you on the gain anyway.
Assuming the condo qualifies for the Section 121 exclusion. Almost no absentee owner meets the 2-of-5-year use test. Check with a CPA before relying on it.
Ignoring depreciation recapture on a unit you once rented. The IRS recaptures depreciation taken or allowable— meaning even if you never claimed it, you still owe the recapture tax.
Forgetting estimated tax payments. A USD 100K+ tax bill due 90 days after closing surprises sellers who only planned for the closing wire.
Not tracking cost basis and improvements. Sellers who cannot document USD 50K-100K of improvements lose those dollars at the higher capital gains rate. Pull old contractor invoices before listing.
Moving from a high-tax state right before closing. The residency-allocation rules in CA, NY, and NJ can pull the gain back into their tax base. Talk to a state-tax specialist if you are mid-move.

The sequence for out-of-state sellers, working backward from closing

6-12 months before closing: Pull cost basis records — original closing statement, every improvement invoice. Confirm depreciation history if the unit was ever rented. Engage a CPA who handles multi-state real estate sales.
3-4 months before closing: Model federal + state + NIIT + recapture tax at expected sale price. Identify whether estimated tax payments will be required in the quarter of sale.
At closing: Receive 1099-S from closing agent. Confirm the gross sales price reported matches your records. Store closing statement.
Quarter of closing: Make federal and state estimated tax payments to avoid underpayment penalties.
Year following closing: File federal return reporting the sale on Schedule D and Form 8949. File home-state return picking up the same gain at state rates.

How this fits into Tom's Net + Risk Review

The free 30-minute Net + Risk Review I run for absentee sellers covers the US-side real estate mechanics — pricing, selling costs, milestone status, special-assessment exposure, what it looks like to sell without flying down. I am a Florida real estate broker, not a CPA, and the Review is not tax advice. What it is: a directionally-correct net-at-closing projection so you can decide whether the sale makes sense at today’s price, plus a referral to a CPA who handles multi-state real estate sales for the federal LTCG, NIIT, depreciation recapture, and home-state math.

Disclaimer: Nothing in this article is tax or legal advice. Federal and state tax laws change, brackets are indexed annually, and individual situations differ. Anyone selling US real estate while domiciled in another state must engage a CPA who handles multi-state and capital-gains work. I will hand off to one when the situation calls for it.

Related FAQs

Want a directionally-correct net number before you list?

A free 30-minute Net + Risk Review covers the US-side real estate mechanics for out-of-state owners — pricing, selling costs, milestone status, special-assessment exposure, selling without flying down. I am a Florida real estate broker, not a CPA. Federal LTCG, NIIT, recapture, and home-state tax questions get routed to a multi-state CPA I can refer you to.