Thinking about trading your Fort Mitchell rental for a Florida income property but worried about taxes and timing? You’re not alone. Many Northern Kentucky owners want to reposition their equity without triggering a big tax bill. In this guide, you’ll learn the 1031 basics, the two deadlines you cannot miss, Kentucky vs. Florida cost factors, and a simple step-by-step plan. Let’s dive in.
What a 1031 exchange does
A 1031 exchange lets you sell investment real estate and reinvest in other like-kind real property while deferring federal capital gains and depreciation recapture tax. Both your Fort Mitchell rental and the Florida property must be held for investment or business use. Since 2017, these rules apply to real property only.
You report the exchange on IRS Form 8824 and follow specific identification and closing timelines. You also need a qualified intermediary to hold proceeds so you do not receive or control the funds. You can review the rules in the IRS Instructions for Form 8824.
The two deadlines you cannot miss
You have two clocks running once you transfer your Fort Mitchell property:
- 45-day identification window. Identify potential Florida replacement properties in writing and deliver to your qualified intermediary.
- 180-day exchange period. Receive (close on) the replacement property by the earlier of 180 days from transfer or your tax return due date for that year.
The 45 days run inside the 180 days. Missing either deadline usually kills deferral. Common identification methods include the three-property rule and the 200 percent or 95 percent rules. For a practical overview of these options, see this deadline and identification guide.
Kentucky vs. Florida tax and cost factors
Kentucky sale side: what to expect
Kentucky generally conforms to federal 1031 treatment, which means the state usually follows federal deferral rules when they apply. Conformity can change with legislation, so confirm your specific tax year with a Kentucky CPA. See the state conformity overview from Deloitte.
At closing, plan for local recording and transaction fees in Kenton County. Your title company can quote current costs.
Florida purchase side: plan for these costs
Florida does not impose a personal income tax on individuals. That matters if you later recognize gain while a Florida resident. For context, review the Tax Foundation’s Florida overview. Residency and timing are complex, so speak with your tax advisor.
Florida charges a documentary stamp tax on deeds. The usual rate outside Miami-Dade County is $0.70 per $100 of consideration. Confirm rates for your county and deal type with the Florida Department of Revenue’s documentary stamp tax page.
Insurance and flood risk vary widely by location. Lenders often require flood insurance in high-risk zones, and homeowners policies may include hurricane deductibles. Before you commit, review guidance from the Florida Office of Insurance Regulation on flood insurance basics and get quotes.
Common exchange structures
Most investors use a standard deferred exchange where you sell first, then buy within the 45 and 180 day windows. If you find the Florida property first, a reverse exchange may work by parking title with an accommodator. You can also complete improvements during an exchange using a construction structure. Each adds cost and complexity. Here’s a plain-language primer on exchange types.
Step-by-step plan for Fort Mitchell owners
Confirm property eligibility
- Use only real property held for investment or business on both sides. Keep records that show investment intent. Review the IRS Form 8824 instructions.
Line up a qualified intermediary before listing
- The QI holds proceeds and prevents constructive receipt. Confirm bonding, insurance, and controls in writing.
Build your timeline
- From the day you transfer your Fort Mitchell property, mark day 45 and day 180. Work backward for inspections, lender underwriting, and insurance quotes in Florida.
Match your equity and debt
- To fully defer gain, reinvest all net equity and replace equal or greater debt. Shortfalls can create taxable “boot.” Coordinate with your lender early.
Underwrite Florida costs
- Add documentary stamp tax to your closing budget. Price homeowners and flood insurance and review likely hurricane deductibles. Confirm local rules if you plan a short-term rental.
Confirm state tax outcomes
- Verify Kentucky’s treatment for your tax year and discuss future residency plans with a CPA. Timing and domicile can affect where future gains are taxed.
Document and report
- Keep contracts, QI agreements, identification notices, and closing statements. File Form 8824 with your federal return for the year of the exchange.
Avoid common traps
- Do not touch the proceeds. Do not miss 45 or 180 day deadlines. Do not reduce debt without a plan. Budget for Florida transfer tax and insurance.
Simple example timeline
- Day 0: Close sale of your Fort Mitchell rental and fund the QI.
- Day 30: Deliver your written identification of up to three Florida properties to the QI.
- Day 75: Finalize insurance quotes, lender approval, and inspections.
- Day 120: Close on your Florida replacement property through the QI.
Mistakes to avoid
- Taking possession or control of sale proceeds.
- Waiting until after closing to hire a qualified intermediary.
- Missing the 45-day identification or 180-day closing dates.
- Reducing mortgage debt without adding cash, which can trigger taxable boot.
- Underestimating Florida documentary stamp tax and insurance costs.
- Skipping proper reporting on Form 8824.
How our team helps you execute
You need a fast, well-coordinated sale in Northern Kentucky and a smooth purchase in Florida, all on a tight clock. Our team’s marketing-first approach helps you sell quickly and maximize proceeds, while our documented processes keep your exchange timeline on track. We coordinate details with your QI, title companies, and lender, and we support staging and renovation coordination when needed. With multistate expertise across Kentucky and the Florida Gulf Coast, we help you move capital with confidence.
Ready to map your 1031 timeline and purchase plan? Connect with Janell Stuckwisch to get started.
FAQs
Can I exchange a Fort Mitchell single-family rental for a Florida condo or short-term rental?
- Yes, if both are held for investment or business use, you follow the 45 and 180 day rules, and you avoid personal use that could jeopardize eligibility. Review IRS rules in the Form 8824 instructions.
What are the exact 45 and 180 day rules in a 1031 exchange?
- You must identify replacement property in writing within 45 days and close on it within 180 days from the transfer date of your relinquished property. See this practical deadline guide.
How does Kentucky treat my 1031 exchange on the sale side?
- Kentucky generally conforms to federal 1031 rules for deferral, subject to current conformity law for your tax year. Confirm your situation with a CPA and review Deloitte’s conformity summary.
What is Florida’s documentary stamp tax on property purchases?
- Florida typically charges $0.70 per $100 of consideration outside Miami-Dade County, which is due at recording. Check current details on the state’s doc stamp tax page.
Do I need to match my old loan amount to avoid taxable boot?
- To fully defer tax, you generally need to reinvest all net equity and replace equal or greater debt. Reducing debt or taking cash can create taxable boot, which you report on Form 8824.