The True Cost of Selling Your Airbnb: Depreciation Recapture, Capital Gains, and the Math Most Florida Owners Miss

When owners call us about selling, the second question we ask (after “why?”) is “what's your after-tax sale number?” Roughly nine out of ten times, the answer is some version of “sale price minus what I paid for it.”

That answer is wrong by 20–35%. Sometimes more.

Florida has a real advantage — no state income tax — but the federal tax stack on a depreciated short-term rental sale is heavier than most owners realize. Depreciation recapture, capital gains, the Net Investment Income Tax, agent commissions, closing costs, and the loss of accumulated bonus depreciation strategies can quietly delete six figures of expected take-home.

This article walks the full math on a realistic Florida sale, breaks down the five hidden tax surprises, explains the 1031 exchange option (and why most STR owners don't qualify the way they think they do), and shows you the side-by-side comparison most CPAs don't bother to run: sell now versus co-host for 18 months and decide later.



We're not CPAs and this is not tax advice. Talk to your CPA before you sign anything. But if you're going to walk into that meeting, you should walk in with the right questions.

The trap: “sale price minus purchase price” is not your profit

Here's the math most owners do in their head:

I bought it for $425K, I'll sell it for $625K, that's $200K — minus the mortgage payoff and a few costs. Maybe I net $150K.

That math ignores the IRS, ignores the agent, and ignores the fact that you've been depreciating the property for years.

Let's walk through what actually happens.

Worked example: a $625,000 Florida Florida STR sold in 2026

Composite owner profile, but the numbers are realistic for a 30A or Destin 2-bedroom condo:



• Purchase price (2020): $425,000
• Sale price (2026): $625,000
• Cumulative depreciation taken (2020–2026): $80,000 (roughly $13,300/year on a residential 27.5-year schedule)
• Adjusted basis at sale: $425,000 − $80,000 = $345,000
• Total realized gain: $625,000 − $345,000 = $280,000

Step 1: Depreciation recapture

The first $80,000 of gain — the portion equal to depreciation taken — gets taxed as “unrecaptured Section 1250 gain,” capped at 25% federal. For an owner in a high tax bracket, that's a $20,000 federal tax bite. This is the surprise that catches most owners flat-footed, because they think depreciation was “free money” when they took it. It wasn't. It was a deferral, and the IRS is collecting now.

Step 2: Long-term capital gains on the rest

The remaining $200,000 of gain ($280K total − $80K recapture) is taxed at long-term capital gains rates — 0%, 15%, or 20% depending on your taxable income. Most STR owners we work with are in the 15% bracket; high earners hit 20%. At 15%, that's $30,000. At 20%, $40,000.

Step 3: Net Investment Income Tax (3.8%)

If your modified adjusted gross income is over $200K single or $250K married, the NIIT adds 3.8% on the lesser of your investment income or the amount over the threshold. On a $200K capital gain, that's roughly $7,600 more for a couple comfortably over the threshold.

Step 4: Florida saves you here — but only here

Florida has no state income tax, so unlike a California or New York seller, you don't add another 5–13% on top. This is a real advantage. It's also the only place Florida helps you on the tax stack.

Step 5: Agent commission and closing costs

Standard agent commission on a furnished STR sale is 5–6% — call it $34,375 at 5.5% on $625K. Closing costs, title insurance, transfer taxes, and recording fees run another 1–2%, or roughly $9,000

Putting it together

Most owners walking into this scenario thought they'd net somewhere north of $300K. The actual cash check is closer to $200K. That's roughly a $100K gap between the imagined sale and the real one.

The five hidden tax surprises that ambush sellers

1. Recapture even if you took standard depreciation. The IRS recaptures whether you took the deduction or not — the calculation is on “allowable” depreciation, not “taken.” If you skipped depreciation, you still pay the recapture and you don't get the past benefit. Always take the depreciation.
2. The Net Investment Income Tax. The 3.8% surtax surprises high-earning sellers because it doesn't show up on most quick calculators.
3. Loss of accumulated bonus depreciation upside. If you did a cost segregation study, sale triggers recapture on accelerated portions — some of it at ordinary income rates as high as 37%.
4. STR-specific complexity. If you used the “STR loophole” (material participation + average stay under 7 days) to take active losses against W-2 income, the basis math gets messier on sale. Talk to a CPA who specializes in STRs, not just rentals.
5. Florida tourist development tax wind-down. Closing your county TDT account triggers a final reconciliation, and any back-taxes or audit findings are paid before you walk away from the deal.

The 1031 exchange option — and why most STR owners don't qualify the way they think

A 1031 exchange lets you defer both capital gains and depreciation recapture by rolling the sale proceeds into a like-kind investment property. For long-term rentals, this is well-trodden territory. For short-term rentals, it's murkier.

The IRS has historically scrutinized 1031s on properties used as personal vacation homes or with significant personal-use days. To preserve a clean 1031 on an STR, the IRS expects:

• The property to be held for productive use in a trade or business or for investment
• Personal-use days to be limited (the safe harbor is no more than 14 days or 10% of rental days, whichever is greater, in each of the two years before sale)
• Bona fide rental activity at fair market rates
• Replacement property to be similarly held for investment



If you've used your STR as a part-time family vacation home, talk to a 1031 attorney before assuming you qualify. The exchange can save you the entire tax bill we walked through above — but only if it's structured cleanly.

The breakeven test: how many months of mediocre cash flow does your tax bill equal?

Here's a thought experiment we walk owners through. Take the total tax + transaction costs from your sale projection — in our example, that's roughly $100,000. Now ask: how many months of net cash flow from your existing property would it take to equal that number?

On a Florida 2-bedroom netting $24,000/year under self-management, the answer is about 50 months. Under a co-host arrangement that lifts net to $34,000/year, the answer is about 35 months.



The point of the exercise: if you're going to keep the property for three more years anyway, selling now hands the IRS roughly the same dollar amount you'd otherwise earn in cash flow. You're paying for the tax bill out of next year's gain instead of out of next year's income — same dollars, very different tax treatment.

Sell now vs. co-host for 18 months and decide later

This is the comparison we run for every prospective seller. The numbers are owner-specific, but the structure is always the same:

Selling your Airbnb in Florida is a complex financial maneuver that requires looking far beyond the sale price. To protect your wealth, you must account for the 25% depreciation recapture tax, federal capital gains, and local documentary stamp taxes. Often, the hidden costs of selling can represent 15% to 30% of your total equity. Before you sign a listing agreement, ensure you have calculated your adjusted basis and explored deferral strategies like the 1031 Exchange.

The honest case for selling now is liquidity — you want the cash in hand for another use. The honest case for the co-host pivot is that it preserves the asset, the cash flow, and the option value, while removing operations from your plate immediately.

When selling really IS the right financial move

We're not anti-sale. There are four cases where we tell owners to list:

• Your submarket has structurally broken (permanent regulation, demand collapse, HOA changes that kill STR use)
• Your equity is needed for a higher-return opportunity you've already underwritten
• You're inheriting estate or divorce circumstances that make ownership untenable
• You qualify for the Section 121 primary-residence exclusion and you can convert before sale (a complex strategy that can shelter up to $250K/$500K of gain)

How to talk to a CPA before talking to a Realtor