Last updated: 14 October 2026
How is Capital Gains Tax charged when you dispose of a property?
You pay Capital Gains Tax when you sell, give away, swap or otherwise dispose of a property that isn’t your main home, such as a buy-to-let, a second home or inherited property. The gain is the sale proceeds (or market value for a gift) minus what you paid and your allowable costs. After the £3,000 annual exempt amount, gains on residential property are taxed at 18% within your basic rate band and 24% above it in 2026/27, and you must report and pay within 60 days.
What counts as a disposal?
- Selling the property
- Giving it away, except to a spouse or civil partner
- Transferring it to a company, even your own
- Exchanging it for another asset
- Receiving compensation, such as insurance money for its destruction
The date of disposal is usually the date contracts are exchanged, not completion. The 60-day deadline, though, runs from completion.
Allowable costs
| Allowable | Not allowable |
| Purchase price | Mortgage interest |
| Stamp Duty Land Tax and legal fees on purchase | Repairs and redecoration |
| Estate agent and legal fees on sale | Costs claimed against rental income |
| Capital improvements, e.g. an extension or loft conversion | Your own time and labour |
| Costs of defending your title to the property | Insurance |
Example
Fatima bought a buy-to-let for £180,000 in 2012, paying £5,000 in purchase costs. She added a £25,000 kitchen extension. She sells it in 2026/27 for £340,000, paying £6,000 in fees. Her gain is £340,000 less £216,000, or £124,000. After the £3,000 exemption, £121,000 is taxable. She has £10,000 of basic rate band left, so she pays 18% on £10,000 (£1,800) and 24% on £111,000 (£26,640), a total of £28,440.
Reliefs that can reduce the gain
- Private residence relief: for any period it was your main home, plus the last 9 months
- Lettings relief: only where you lived in the property at the same time as a tenant
- Capital losses: from other disposals in the same or earlier years
- Gift holdover relief: only for business assets or transfers into certain trusts, not ordinary buy-to-lets
- Incorporation relief: where a genuine property business is transferred to a company for shares
Reporting and paying
Use HMRC’s online UK property account to report and pay within 60 days of completion. If you file a Self Assessment return, include the gain there too, and any CGT already paid is credited. Non-UK residents must report all UK property disposals within 60 days, even if no tax is due.
Companies
If your property is held in a company, the gain is charged to corporation tax at 19% to 25%, and there’s no annual exempt amount.
Frequently asked questions
Is CGT due on a property I inherited?
Only on the rise in value since the date of death.
Can I deduct my mortgage?
No, the mortgage doesn’t reduce the gain.
What if I make a loss?
Report it to use against future gains.
Does CGT apply to land?
Yes, the same rules apply, but non-residential gains are taxed at 18% and 24% too.
Related: CGT on a jointly owned property, CGT when selling your home and corporation tax on capital gains.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with Capital Gains Tax on property. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
