If you’re planning to sell your home in Flower Mound, your focus is likely on timing, pricing, and where you’ll go next. But before you finalize your sale, it’s important to understand how capital gains tax could impact your profit.
In a high-appreciation market like Flower Mound, many long-time homeowners are seeing significant increases in equity. That’s great news—but it can also trigger a tax liability if you're not careful. In this guide, we’ll cover the key rules, exemptions, and planning strategies so you can keep more of your hard-earned equity.
What Is Capital Gains Tax When Selling a Home?
Capital gains tax is the federal tax on the profit from selling your home—meaning the difference between what you paid for it (plus certain expenses) and what you sell it for.
Here's How It Works:
-
Short-term capital gains (home owned less than 1 year) are taxed as ordinary income.
-
Long-term capital gains (owned more than 1 year) are taxed at 0%, 15%, or 20%, depending on your income bracket.
-
No state capital gains tax in Texas, which is great news for local homeowners.
Takeaway: The tax applies only to your profit—and you may not owe anything at all if you qualify for a capital gains exclusion.
Do All Flower Mound Homeowners Pay Capital Gains Tax?
No. In fact, many Flower Mound sellers qualify for a substantial exclusion under IRS rules.
You May Exclude:
-
Up to $250,000 in profit if you're single
-
Up to $500,000 if you're married and filing jointly
To Qualify for the Exclusion:
-
You owned the home for at least two of the last five years.
-
You used the home as your primary residence for at least two of the last five years.
-
You haven’t used the exclusion on another home sale in the past two years.
If you meet these criteria, you can sell your home and pocket up to $500,000 in gains—completely tax-free.
Takeaway: Most long-time homeowners in Flower Mound who lived in their home as a primary residence qualify to exclude a large portion of their profits.
What If You Don’t Qualify for the IRS Exemption?
If you don't meet the ownership or residency tests, or if you've used the exclusion recently, you may owe capital gains tax on your net profit. But even then, not all of your profit is taxable.
Calculating Your Capital Gain:
Capital Gain = Sale Price – (Purchase Price + Improvements + Selling Expenses)
Expenses That May Reduce Your Gain:
-
Major home improvements (kitchen remodels, additions, HVAC upgrades)
-
Closing costs when buying and selling
-
Real estate agent commissions
-
Staging and marketing costs
Exceptions for Partial Exclusion:
-
Work relocation
-
Health-related move
-
Divorce, death, or other unforeseen circumstances
Takeaway: Even if you don’t qualify for the full exemption, proper documentation and planning can reduce your taxable gain—or eliminate it altogether.
How to Reduce or Avoid Capital Gains When Selling
Here are several ways to reduce or avoid capital gains taxes legally when selling your Flower Mound home:
Key Strategies:
-
Live in the home at least 2 years before selling.
-
Keep detailed records of all major home improvements.
-
Track selling-related costs like staging, commissions, and legal fees.
-
Sell during a lower-income year, if possible, to qualify for a lower tax rate.
For Investment Properties:
If you're selling an investment property, you may qualify for a 1031 Exchange, allowing you to defer taxes by reinvesting in another investment property.
Takeaway: With good planning and the right documentation, you can significantly reduce your capital gains tax—or eliminate it completely.
Explore our proven seller strategies: Signature Sales Strategy
Plan Your Sale the Smart Way
If you're selling a home in Flower Mound, timing and tax planning are just as important as pricing. At BlueFuse Group, we help clients think strategically—so they walk away with the maximum profit and minimal tax liability.
Let’s talk through your timeline, your home's value, and the best next steps—before you list.
Contact Brian today to schedule a complimentary strategy session.
Why Capital Gains Matter More in Flower Mound
Home values in Flower Mound have seen significant appreciation over the past decade, especially in desirable communities like Bridlewood, Wellington, and Canyon Falls.
Local Market Snapshot:
-
Average home value: $650,000+
-
5-year appreciation: Over 40%
-
Luxury communities have seen even greater equity growth
For many longtime homeowners, this appreciation means you could exceed the IRS exclusion cap—triggering a taxable event unless you plan ahead.
Takeaway: The more your home has appreciated, the more essential it is to understand and manage your capital gains tax exposure.
Looking to reinvest equity into a new home? Explore our BLUEFUSE Buyer Blueprint.
FAQs: Capital Gains Tax for Flower Mound Sellers
Q1: What is considered a capital gain when selling my home?
A: Your capital gain is the difference between your home’s sale price and its adjusted cost basis (purchase price + improvements + costs).
Q2: Are home improvements deductible when calculating capital gains?
A: Yes. Improvements that add value—such as remodels, new roofs, or energy-efficient systems—can reduce your taxable gain.
Q3: What if I sell my home before living in it for two years?
A: You may owe tax on the full gain unless you qualify for a partial exclusion due to work, health, or another approved reason.
Q4: Do I pay capital gains tax on rental or investment properties?
A: Yes, but you may defer the tax using a 1031 exchange if you reinvest the proceeds into another qualifying property.
Let’s Build Your Future Together
Selling a home is more than a financial transaction—it’s a major life move. That’s why the BlueFuse Group is here to guide you with clarity, strategy, and care. From pricing and marketing to tax planning and negotiation, we’ll help you keep more of your equity and move forward with confidence.
📞 Have questions about your home’s value—or how much you’ll keep after taxes? Let’s connect.
Let’s build your future together.
About the Author
Brian White is a top-ranked REALTOR® and founder of the BlueFuse Group at eXp Realty, serving Flower Mound, Southlake, and Dallas–Fort Worth’s most sought-after suburbs. Since 2014, he’s helped hundreds of families buy and sell homes with clarity, strategy, and care.
Brian ranks among the Top 20 eXp agents in Texas and leads one of North Texas’s most trusted real estate teams. He and his wife, Tisha, built the BlueFuse Group around faith-driven values and proven systems like the Signature Sales Strategy and BLUEFUSE Buyer Blueprint.
With deep local knowledge and a calm, data-forward approach, Brian is known for guiding clients through high-stakes decisions—always putting relationships before transactions.
Partner with a Top Flower Mound Real Estate Team
Buying or selling a home in Flower Mound or nearby? Work with a team that puts your goals first. At BlueFuse, we combine market insight with real-world strategy to deliver results you can count on.
📍 Visit www.bluefuserealty.com
📧 [email protected]
📞 817-646-4244
Suggested Links
-
📉 Flower Mound Real Estate Market Update: Low Inventory, High Intent
-
📊 DFW Real Estate Market Update: Inventory Surge Meets Strategic Pricing
-
⚖️ Pros and Cons of Living in Flower Mound, Texas: A Local’s Guide
-
💎 What to Expect When Buying a Million-Dollar Home in Flower Mound
