Will You Owe Capital Gains Tax Selling Your Grapevine Home?

Quick answer: You may owe federal capital gains tax if your profit on a home sale is more than the IRS home sale exclusion: $250,000 for a single filer or $500,000 for a married couple filing jointly, if you meet the ownership and use tests. Texas does not impose a state personal income tax, so any tax on a home-sale gain would be federal. Gain above the exclusion is generally taxed as a long-term capital gain at 0%, 15% or 20% depending on your taxable income, and may also be subject to the 3.8% net investment income tax.

By Chris Minteer, Founder and Co-Owner, Minteer Real Estate Team · Published October 9, 2026 · Last updated October 12, 2026

Many Grapevine, Colleyville and Southlake owners have held their homes a long time, and some have seen large gains. Whether that creates a tax bill depends on a few numbers, and most of them are in your hands before you list. This post is general information, and your CPA has the final word on your situation.

Does Texas tax capital gains on a home sale?

No. Texas does not impose a state personal income tax (Texas Constitution, Art. VIII, Sec. 24-a), so any tax on the gain from selling your home would be federal. That federal piece is the part people miss.

How does the home sale exclusion work?

Your gain is generally the sale price minus your adjusted basis (and minus selling expenses). The IRS lets you exclude up to $250,000 of that gain if you are single, or $500,000 if you are married filing jointly, as long as you owned the home and used it as your main home for at least 2 of the last 5 years before the sale. The ownership and use periods do not have to be the same 2 years.

Source: IRS Topic No. 701, IRS Publication 523, IRS Topics 409 and 559.

If only one spouse meets the use test, the couple may be limited to the $250,000 single amount rather than getting a reduced share of $500,000. This is worth confirming with a tax professional.

What rate applies to gain above the exclusion?

Gain above the exclusion is generally taxed as a long-term capital gain at 0%, 15% or 20% depending on your taxable income. The IRS lists 2025 thresholds on its Topic 409 page, so check the current figures for your sale year. Gain above the exclusion can also be net investment income, which may bring the 3.8% net investment income tax when your modified adjusted gross income is above $200,000 for single filers or $250,000 for married filing jointly (IRS Topic 559). If you rented the home, depreciation claimed after May 6, 1997 can't be excluded and is taxed at up to 25%.

Could a Grapevine-area seller exceed the exclusion?

It is possible if you have owned a long time and the home has appreciated a lot. We would not assume it either way. Our June 2026 DFW housing market update covers recent prices by suburb, and your own purchase price, improvements and likely sale price are what matter for your math.

How can you lower the number before you list?

Your basis is not just your purchase price. It is your purchase price plus capital improvements, such as a new roof, a kitchen remodel, an added bathroom, a pool or a new HVAC system (IRS Publication 523). Routine repairs and maintenance generally do not count, though repair-type work done as part of a larger remodel can. Basis reduces your gain dollar for dollar, so records matter:

• Pull together permits, contractor invoices and receipts for major projects since you bought
• Separate improvements (additions, major system replacements, structural work) from ordinary upkeep
• If a project is borderline, such as a system replacement, ask your CPA before you finalize your number

The 2-of-5-year rule can also work against you. If you moved out and rented the home, or left it more than a few years ago, you may no longer meet the use test. Divorce and inheritance follow different rules. In a divorce, a former spouse's time living in the home may count toward your use test if the divorce or separation instrument lets that spouse live there. An inherited home generally gets a stepped-up basis to fair market value at the date of death, which can reduce the gain on a sale (Publication 523).

What does the math look like in practice?

Say a married couple bought a Colleyville home for $600,000 and it is now worth $1.3 million. That is a $700,000 gain on paper. With $120,000 in documented capital improvements, the adjusted basis is $720,000 and the gain is $580,000. Subtract the $500,000 exclusion and about $80,000 is potentially taxable. That is before selling expenses, which also reduce your gain. On $120,000 of documented improvements, the federal tax difference can be thousands to tens of thousands of dollars depending on your bracket. This is an illustration, not a prediction for your home.

Bills to remove the exclusion cap have been introduced in Congress. As of October 12, 2026, we are not aware that any has become law, so current rules apply; check with your CPA closer to your sale date.

Frequently asked questions

Does Texas have a state capital gains tax on home sales?

No. Texas does not impose a state personal income tax, so any tax on a home-sale gain would be federal.

How much capital gains tax will I actually pay?

It depends on your gain above the exclusion and your taxable income. Gain above the exclusion is generally taxed as a long-term capital gain at 0%, 15% or 20%, and may also be subject to the 3.8% net investment income tax. Depreciation claimed after May 6, 1997 on a rented home is taxed at up to 25%.

Do I qualify for the full $500,000 exclusion if I'm married?

Possibly. Either spouse can meet the 2-year ownership test, but both spouses must meet the 2-year use test. If only one does, the couple may be limited to $250,000.

What records should I keep to reduce my capital gains tax bill?

Keep receipts, invoices and permits for capital improvements such as remodels, additions, new systems, a pool or a new roof. These raise your cost basis. Routine repairs and maintenance generally do not count.

Can I avoid capital gains tax by buying another house with the proceeds?

Not under current law for a main home. The rollover rule that postponed gain when you bought a replacement home applied to sales before May 7, 1997, and was replaced by the home sale exclusion.

Next steps

We're real estate agents, not tax professionals, so please run your numbers by a CPA or tax attorney. What we can do is help you understand what your home could bring today, so you and your tax advisor start from a current figure. Get your home value here, and we're glad to walk through it. Related reading: our property tax explainer, a different tax with different rules, and what to expect when selling your home.

Sources

• Topic No. 701, Sale of your home — Internal Revenue Service
• Publication 523, Selling Your Home — Internal Revenue Service
• Topic No. 409, Capital gains and losses — Internal Revenue Service
• Topic No. 559, Net investment income tax — Internal Revenue Service
• Texas Constitution, Art. VIII, Sec. 24-a (Individual Income Tax Prohibited) — Texas Legislature Online
• NTREIS Agent Market Share reports, single-family residential, City of Grapevine and City of Colleyville, January 1 to December 31, 2025, ranked by total sides (reports run October 23, 2026)
• Minteer Real Estate Team profile, RealTrends Verified (2025 sales data)

Checked October 12, 2026.

About the author: Chris Minteer founded Minteer Real Estate Team in 1986 and is a REALTOR® with the team, a full-service residential real estate team based in Grapevine, Texas, serving Northeast Tarrant County and the greater Dallas–Fort Worth metroplex. #1 in Grapevine, #3 in Colleyville and top 3 in GCISD for single-family transactions in 2025, per NTREIS. RealTrends Verified 2026: #1 team in Grapevine by volume and by sides (2025 sales data). Minteer Real Estate Team is brokered by Real Broker, LLC (Broker #9003138). 216 W Wall St #100, Grapevine, TX 76051 · (817) 796-9172 · info@minteerteam.com · REALTOR® · Equal Housing Opportunity.

This article is general information, not legal, tax or financial advice. Tax rules and thresholds change; consult a CPA or tax attorney about your situation.