Capital Gains Tax Texas

The Capital gains tax of Texas is levied on any profit obtained from the sale of investment properties and real estate. It is a federal tax and regulated by the Internal Revenue Services.

Capital gains tax is determined on basis of the amount of profit made from a particular deal. These taxes are generally calculated through a certain process. In this process, the principal amount (original purchase price) of the house and the additional amount (cost of modification in the house) are subtracted from the selling price. In this way the total profit made from the deal becomes clear. The capital gains tax is levied on this net profit.

The capital gains tax in Texas allows some relief or deductions on the profit. The Tax Payer Relief Act of 1997 provides this benefit to the tax-payers. According to this rule, the single home-owner can make a profit of not more than $250,000 by selling a property. This amount is totally relieved from any type of capital gains tax. The amount for Married couples is $500,000 as long as they file their taxes jointly



The Texas capital gains tax relief is conditional. In order to take advantage of the relief, the following conditions should be fulfilled:

• The applicant for capital gains tax exclusion must be the owner of the property for at least five years before selling
• He or she must have resided in the particular house for at least two years, which should be within the span of last five years from the year of selling
• Married couples should have stayed in the house for not less than two years
• The capital tax exclusion in Texas is allowed once in two years
• If any member of a married couple has enjoyed the benefit in the last two years, the other is not allowed to use the relief within the same time span.