Capital Gains Tax on Property
Capital Gains Tax on Property
Selling a buy-to-let, second home, inherited property or former main residence? Understand how UK Capital Gains Tax on property works, what you can deduct, the reliefs available and when CGT must be reported and paid.
- ✓ 2026/27 CGT rates
- ✓ Allowable costs explained
- ✓ Private Residence Relief
- ✓ Property CGT calculator
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Capital Gains Tax on property can apply when selling a buy-to-let, second home or other chargeable UK property.
Calculate the potential gain before completion and check whether the 60-day reporting requirement applies.
What is Capital Gains Tax on property?
Capital Gains Tax on property is a tax that may be payable on the profit you make when you sell, give away or otherwise dispose of a property. It commonly affects buy-to-let properties, second homes, inherited properties and properties that have not always qualified in full for Private Residence Relief.
You are taxed on the gain, not the property's total selling price. Broadly, your gain is the disposal proceeds less the property's allowable acquisition cost, eligible buying and selling expenses and qualifying capital improvement expenditure.
Your main home will often be fully exempt under Private Residence Relief (PRR), provided the relevant conditions are satisfied.
When might you pay Capital Gains Tax on property?
Whether CGT is payable depends on the property, how you have used it, your ownership history, your overall gains and losses and any tax reliefs available.
Buy-to-let property
A gain arising when you sell a rental property is normally within the scope of Capital Gains Tax.
Second homes
A second home that does not qualify as your main residence can create a taxable capital gain when disposed of.
Inherited property
There is generally no CGT merely because you inherit property, but CGT may arise if its value increases between the relevant probate value and your later disposal.
Property given away
Giving property to someone can still be a disposal for CGT. Where the recipient is not your spouse or civil partner, market value rules can apply.
Former main homes
If a property was your home for only part of your ownership, part of the gain may qualify for Private Residence Relief and part may remain chargeable.
Non-UK residents
Non-UK residents can be liable to UK tax when disposing of UK land and property and have specific reporting obligations.
Capital Gains Tax on property rates
For disposals in the 2026/27 tax year, individuals generally pay CGT at 18% to the extent the taxable gain falls within their unused basic rate Income Tax band and 24% on the remainder.
| 2026/27 position | Rate / allowance | What it means |
|---|---|---|
| Lower individual CGT rate | 18% | Applies to taxable gains falling within the available basic rate band |
| Higher individual CGT rate | 24% | Applies to taxable gains above the available basic rate band |
| Annual Exempt Amount | £3,000 | Annual CGT exemption for most individuals |
| Most trustees | £1,500 allowance | Lower Annual Exempt Amount generally applies |
Capital Gains Tax on Property Calculator
Use this calculator for a quick estimate of a straightforward property gain. Enter amounts relating to your share of the property. More complex cases involving Private Residence Relief, losses, trusts, non-residence or other reliefs should be calculated separately.
This calculator is an indicative 2026/27 estimator, not personal tax advice. It assumes an individual taxpayer and a £3,000 Annual Exempt Amount. It does not automatically calculate Private Residence Relief, Letting Relief, non-resident rules, connected-person transactions, brought-forward loss restrictions or other specialist CGT provisions.
How is Capital Gains Tax on property calculated?
Work out the disposal proceeds
Start with the amount received for the property. Special valuation rules can apply to gifts and transactions between connected persons.
Deduct the allowable acquisition cost
Usually this is what you paid for the property, although inherited, gifted and other special acquisitions may require a different base value.
Deduct allowable costs
Certain costs directly connected with acquiring or disposing of the property can normally be taken into account.
Deduct qualifying improvement expenditure
Capital expenditure that enhances the property's value and remains reflected in the property at disposal may be allowable. Routine repairs and maintenance are generally different.
Apply losses and available reliefs
Allowable capital losses and reliefs such as Private Residence Relief can substantially change the chargeable gain.
Apply the Annual Exempt Amount and CGT rates
For most individuals the 2026/27 Annual Exempt Amount is £3,000. The remaining taxable gain is then charged at the appropriate CGT rate or rates.
What costs can you deduct when selling a property?
Keeping evidence of allowable expenditure can make a significant difference to your eventual Capital Gains Tax calculation.
| Expense | Potential CGT treatment | Example |
|---|---|---|
| Original property cost | Normally deductible | Price originally paid |
| Stamp Duty Land Tax | Normally deductible acquisition cost | SDLT paid when property was bought |
| Legal/conveyancing fees | May be deductible | Eligible solicitor costs of purchase or sale |
| Estate agent fees | Normally deductible where related to disposal | Selling agent commission |
| Capital improvements | May be deductible | Qualifying extension or structural improvement |
| Routine repairs | Generally not an enhancement cost for CGT | Decorating or routine maintenance |
| Mortgage repayments | Not part of the CGT property cost | Capital repaid to lender |
Example: CGT when selling a buy-to-let property
Property bought for £180,000 and sold for £320,000
| Sale proceeds | £320,000 |
| Less purchase price | £180,000 |
| Less allowable buying/selling costs | £12,000 |
| Less qualifying capital improvements | £18,000 |
| Capital gain | £110,000 |
| Less 2026/27 Annual Exempt Amount | £3,000 |
| Taxable gain | £107,000 |
The actual CGT bill then depends on the owner's taxable income and how much, if any, of their basic-rate band remains available. The taxable gain can therefore be split between the 18% and 24% CGT rates.
Do you pay Capital Gains Tax when selling your home?
You will normally have no CGT to pay when selling a property that qualifies in full for Private Residence Relief. However, full relief should not automatically be assumed simply because a property has been your home at some point.
✓ Periods you lived there
Periods during which the property genuinely qualified as your only or main residence will normally contribute towards Private Residence Relief.
✓ Final 9 months
If the property qualified as your only or main residence at some point, the final nine months of ownership will generally qualify for relief, subject to the applicable rules.
⚠ Letting the property
If you moved out and subsequently let the whole property, do not assume historic Letting Relief still shelters the gain. Modern Letting Relief is generally restricted to qualifying shared-occupancy situations.
Capital Gains Tax rules for different property sales
Capital Gains Tax on a buy-to-let property
A buy-to-let property will normally be a chargeable asset. The gain is calculated using your share of the disposal proceeds and allowable costs. If the property was previously your main residence, Private Residence Relief may shelter part of the gain.
Capital Gains Tax on a second home
A second home can produce a taxable gain when sold. Where you have had more than one residence, the Private Residence Relief rules can become more complex and depend on the facts and, where relevant, valid nominations.
Capital Gains Tax on inherited property
CGT is not normally charged simply because you inherit property. If you later dispose of it, however, a gain can arise by reference to the property's relevant value when inherited and its subsequent disposal value.
Capital Gains Tax when gifting property to children
A gift can be a disposal for CGT even though you receive no money. Where property is given to a connected person such as a child, the CGT calculation may use market value rather than zero consideration.
Transferring property to a spouse or civil partner
Transfers between spouses and civil partners who are living together can generally take place on a no-gain/no-loss basis. This normally defers rather than permanently eliminates the underlying gain because the recipient effectively takes over the relevant base cost. Different rules can apply following separation.
Capital Gains Tax for non-UK residents selling UK property
Non-UK residents are within the UK CGT regime for disposals of UK land and property and generally have a reporting obligation even where there is no CGT to pay. Specialist rules can affect the gain and any available relief.
Selling property owned jointly
Each beneficial owner normally calculates the gain relating to their own share of the property. Each individual may potentially have their own available Annual Exempt Amount, depending on their circumstances.
The 60-day Capital Gains Tax property reporting rule
If you are a UK resident and CGT is due following the disposal of UK residential property, you generally need to report the disposal and pay the estimated CGT within 60 days of completion.
Complete the sale
The reporting deadline runs from completion, rather than simply waiting for your normal Self Assessment deadline.
Calculate the gain
Establish your allowable costs, reliefs, losses, exemption and estimated tax rate.
Report and pay
Where the property return is required, submit it and pay the estimated CGT within the 60-day deadline.
How can you legally reduce Capital Gains Tax on property?
Tax planning should normally take place before contracts are exchanged or a disposal occurs. Depending on your circumstances, areas worth reviewing include:
Claim all allowable costs
Make sure qualifying purchase, disposal and capital improvement costs have not been overlooked.
Use allowable capital losses
Current-year and eligible brought-forward capital losses can potentially reduce chargeable gains.
Check Private Residence Relief
Where the property has been your home, carefully establish qualifying occupation and absence periods.
Review ownership
Joint ownership affects how the gain is divided. Transfers between spouses or civil partners can have specific CGT consequences and should be considered before taking action.
Consider timing
The tax year in which a disposal occurs can affect available exemptions, losses, taxable income and the CGT calculation.
Calculate before completion
Estimating CGT before selling can prevent an unexpected tax bill and allows time to locate historic records.
Capital Gains Tax on Property FAQs
How much Capital Gains Tax do I pay on property in 2026/27?
For an individual, taxable gains are generally charged at 18% to the extent they fall within the available basic-rate band and 24% above it. The Annual Exempt Amount for most individuals is £3,000 for 2026/27.
What is the Capital Gains Tax allowance for 2026/27?
The Annual Exempt Amount for most individuals is £3,000. This applies across your relevant chargeable gains for the tax year, rather than giving you a separate £3,000 exemption for every property sold.
Do I pay Capital Gains Tax on my main home?
Often not. A property qualifying fully for Private Residence Relief can be sold without CGT on the qualifying gain. Partial relief may apply where it has not been your qualifying only or main residence throughout ownership.
Do I pay CGT on a property I inherited?
There is not normally CGT simply on inheriting property. CGT may arise when you later sell or otherwise dispose of it if its value has increased from the relevant acquisition/probate value.
Can I deduct renovation costs from Capital Gains Tax?
Some capital improvement expenditure may qualify, but ordinary repairs, maintenance and decorating do not automatically qualify as CGT enhancement expenditure. The nature of the work and the relevant tax rules need to be considered.
How quickly must I pay CGT after selling a property?
Where a UK resident has CGT to pay on the disposal of UK residential property, the property disposal generally needs to be reported and the estimated CGT paid within 60 days of completion.
Do non-residents have to report a UK property sale?
Yes. Non-UK residents generally need to report disposals of UK property or land within the applicable deadline even where there is no tax to pay.
Does giving a property to my children avoid Capital Gains Tax?
Not necessarily. A gift is a disposal for CGT purposes and transfers to connected persons can be treated as taking place at market value even where no money changes hands.
Is Capital Gains Tax based on the sale price?
No. CGT is charged on the taxable gain rather than the full selling price. The calculation starts with disposal proceeds and deducts the relevant allowable acquisition cost and qualifying expenditure before applying losses, reliefs and the Annual Exempt Amount.
What happens if I make a loss when selling property?
An allowable capital loss may potentially be set against chargeable gains under the CGT rules. Unused allowable losses may also be capable of being carried forward, subject to the relevant conditions and reporting requirements.
Need help calculating Capital Gains Tax on a property sale?
Property CGT calculations can become complicated where a property has been rented, inherited, jointly owned, gifted, previously occupied as your home or owned by a non-UK resident. The Online Accountants can help you calculate the gain and deal with the relevant tax reporting.
Ask The Online Accountants Self Assessment Tax Return Service