Last updated: 14 October 2026
What are the tax rules for jointly owned inherited property?
When siblings or other relatives inherit a property together, each person owns a share and is taxed separately on it. Each takes the probate value of their share as their base cost for capital gains tax. If the property is let, each reports their share of rental profit on their own tax return. If it’s sold, each calculates their own gain, uses their own £3,000 annual exempt amount and pays CGT at 18% or 24% depending on their income. Inheritance tax was dealt with by the estate before the property passed to you.
How each tax applies
| Tax | How it works for joint heirs |
| IHT | Paid by the estate before distribution |
| Income tax on rent | Each owner’s share, on their own return |
| CGT on sale | Each owner’s share of gain over the probate value |
| SDLT | Not due on inheriting; may apply if one heir buys out another |
| Council tax | Exempt while empty for up to 6 months after probate, then charged |
Joint tenants or tenants in common?
Inherited property is usually held as tenants in common, so each person can leave their share in their will. If co-owners are joint tenants, the survivor automatically takes the whole property.
Buying out a sibling
If one heir buys out the others, the sellers make a disposal and may pay CGT on any growth since death. The buyer may pay SDLT on the price paid. Since 2016, an inherited share of 50% or less never counts towards the higher rates on another purchase, and a larger inherited share is ignored for the first 3 years.
Example
Three siblings inherit their mother’s house in 2025, valued at £360,000. Each has a £120,000 base cost. In 2026, they sell for £390,000, less £9,000 costs. Each has a gain of £7,000, less the £3,000 exemption, so £4,000 taxable. A basic rate sibling pays £720 at 18%; a higher rate sibling pays £960 at 24%. Each reports within 60 days.
Letting before sale
If they let the house while deciding, each sibling reports a third of the rental profit. Expenses such as repairs, insurance and letting fees are shared in the same proportions.
Main residence relief
If one sibling lives in the inherited home as their main residence, they can get private residence relief on their share for that period. The others can’t.
Deeds of variation
Within 2 years of death, heirs can redirect their inheritance, for example to their children, using a deed of variation. It’s treated as made by the deceased for IHT and CGT.
Common mistakes
- Using the original purchase price, not the probate value
- One sibling reporting all the rent
- Missing the 60-day CGT deadline
- Not agreeing how costs are shared
Records to keep
Keep the probate valuation, estate accounts, rental records and the sale completion statement. Each co-owner needs copies.
Frequently asked questions
Do we all need to sign for a sale?
Yes, all legal owners.
Can one sibling live there rent-free?
Yes, by agreement; there may be no rental income.
Who pays the mortgage?
The estate or co-owners by agreement.
Can we put it in a company?
Possible, but CGT and SDLT apply.
Related: inherited property profit, removing a name from property deeds and the trust and estate return.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with jointly inherited 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.
