Capital gains when you sell: the version you can read in four minutes

The big federal break

If the home was your primary residence for at least two of the last five years, federal law generally lets you exclude up to $250,000 of gain — $500,000 for a married couple filing jointly. Gain means sale price minus what you paid minus qualifying improvements, not your whole check. A couple who bought in Willow Park for $350K and sells for $560K has a $210K gain: fully inside the exclusion, federal tax owed on the sale — typically zero.

The Texas part

There is no Texas state income tax, so there's no state capital-gains layer at all. What Texans pay instead is property tax along the way — which you already know — and that's precisely why the homestead exemption and your appraisal-district protest habits matter while you own.

Where it gets complicated

• Rental or partial-rental history — depreciation taken as a landlord is generally recaptured at sale, and the exclusion prorates in some scenarios. This is the most common real complication on the west side's accidental-landlord homes.
• Less than two years of residence — partial exclusions exist for qualifying moves (job, health), but the math changes.
• Inherited property — different regime entirely; see the inherited-house guide and its stepped-up basis note.
• Very large gains — long-tenure Aledo acreage can genuinely exceed $500K of gain; that's a planning conversation worth having before listing.