If you've owned a home in Plano, Frisco, McKinney, or Allen since before the 2020 price run-up, here's a question I'd want you to sit with: do you know how much of your gain the IRS could keep when you sell?
For most DFW homeowners, the answer is "I'll worry about that when I sell" — and that's exactly the problem.
NAR's May 2026 capital gains research finds that the so-called hidden home equity tax — the slice of profit above the $250,000 single / $500,000 married exclusion that becomes taxable on a primary-home sale — is no longer just a coastal problem. About 13.1 million homeowner households nationally, or roughly 15% of all owner-occupied households, already sit above their applicable exclusion threshold. If home prices rise another 10% over the next several years, that number climbs to 17.5 million. A 30% scenario pushes it to 27.2 million — more than 30% of all U.S. homeowners.
That's what's new about this report. The old story was San Jose (63% of homeowners exposed), urban Honolulu (54.4%), and San Diego (about 54%). The new story is the Sun Belt boomtowns. NAR's Nadia Evangelou frames it plainly: "You have the high-cost markets where exposure is already very high, often affecting the majority of homeowners, and then you have the growth markets where exposure is rising quickly as prices increase."
The data on those growth markets is what should make every DFW seller pay attention.
Why the Sun Belt is the next front
NAR singles out Boise and Nashville as standouts: 21.5% and 17.7% of homeowners already exposed today. But the report's whole point is that these markets are unusually sensitive to what happens next. Idaho rises from 20.4% exposure today to 39% in NAR's 30% price-growth scenario. Utah goes from 24.4% to 46.5%. Arizona, 17.4% to 35.4%. Nevada, 18.7% to 38.3%.
Texas isn't called out by name in the state-level table, and that's worth saying clearly. But our metros check every box NAR flags: long-tenured owners who bought before the post-2010 price acceleration, plus a recent pandemic-era surge that pushed values dramatically higher in a short period. The exact dynamic Evangelou describes — "home prices increased significantly during a very short period" — is the Plano / Frisco / McKinney story of 2020–2022.
The bigger structural issue: the $250K / $500K exclusion hasn't moved since 1997. NAR notes the exclusion's real purchasing power has been cut roughly in half by inflation since then, while the U.S. median home price more than tripled, from about $129,000 to $419,300. The rule was written for a different housing market.
What that math could look like for a DFW homeowner
Let me walk through an illustrative case. Imagine a hypothetical Plano homeowner who bought in 2015 for $325,000. Today, comparable Plano sales in their pocket of West Plano put the home in the $725,000 range. Married, filing jointly, they have a $400,000 gain. After the $500,000 exclusion, $0 of that is taxable today — they're fine.
Now picture the same household with a similar 2014 purchase at $290,000 and a comparable today closer to $850,000. The gain is $560,000. The $500K exclusion shields most of it, but $60,000 spills over and is taxable at long-term capital gains rates — potentially up to 20% federal. That's $12,000 of tax that didn't exist in the simpler-math version, before adding any improvements they can document and add to basis.
Now stretch the example one more time: a single seller (filing alone, so $250K exclusion) who bought in McKinney in 2013 for $260,000 and is now looking at a $720,000 list price. Their gain is $460,000. The exclusion covers $250K. The remaining $210,000 is taxable — and that's the kind of math that quietly shifts a "yes, I'll sell next spring" decision into "I think I'll just stay."
These are illustrative scenarios, not real listings. But this is the conversation I'd want every DFW seller who bought before 2019 to have with their CPA — not on the day they list, but at least a year before.
What I'd tell a DFW homeowner to do today
A few things I'd actually act on if I were sitting on appreciated DFW equity.
First, find your basis. That means your purchase price plus every documented improvement — the kitchen remodel, the pool, the roof you replaced after a hailstorm, the new HVAC. Capital improvements add to basis and reduce the taxable gain. Routine repairs don't. If you don't have receipts, start that file now.
Second, run the gain math before you call a listing agent. Estimated list price minus selling costs minus basis equals your gain. Subtract the exclusion. If the leftover number is anything other than zero, you have a tax question, not a real estate question.
Third, talk to a CPA — not your agent, not me, not your brother-in-law who watched a YouTube video. Filing status, state-of-residence rules, timing within a tax year, possibilities like a 1031 if the home is converted to investment property — all of those move the answer. Tax planning is a CPA's job; I'd want one in the room.
Fourth, watch the policy. NAR's Shannon McGahn is pushing the More Homes on the Market Act, which would raise the exclusion to $500,000 for single filers and $1 million for couples and index it to inflation going forward. There's no guarantee it passes. But if you're on the bubble and you can afford to wait a year, the political math is worth tracking.
The reason this matters beyond your own tax bill
Evangelou makes one more point in the NAR report that I think gets missed: when sellers can't list because the after-tax math hurts too much, inventory tightens. Realtor.com economist Joel Berner says it directly — this "works directly against the inventory recovery the market has been slowly putting together." For DFW buyers waiting on more move-up inventory in Plano, Frisco, Allen, and McKinney, the hidden tax on their neighbors is part of why their next house keeps slipping further out of reach.
So this isn't only a tax story. It's a supply story. And it's why every DFW homeowner who's been here more than seven or eight years should know the answer to one question: what does my gain look like, and is any of it exposed?
If you're a DFW homeowner thinking about a 2026 or 2027 sale and you want a sanity-check on the price band — what comparable homes are actually doing right now in your specific pocket of Plano, Frisco, McKinney, or Allen — I'm happy to share that as a starting point. Then take it to your CPA. The order matters.
“If you bought before the 2020 run-up and you're sitting on a Plano home that's doubled in value, this is your math problem too — not just California's.”
