Last updated: 14 October 2026
What are the capital gains tax implications of selling a bungalow?
If the bungalow has been your only or main home throughout your ownership, the gain is usually exempt from capital gains tax (CGT) under private residence relief. If it was a second home, a rental property or an inherited property you didn’t live in, CGT is due on the gain. In 2026/27, that is 18% within your basic-rate band and 24% above, after the £3,000 annual exempt amount. Any CGT must be reported and paid within 60 days of completion.
Working out the gain
| Item | Treatment |
| Sale price | Less estate agent and legal fees |
| Purchase price | Or the market value at the date you inherited it |
| Purchase costs | Stamp duty and legal fees |
| Improvements | For example an extension or a loft conversion |
| Repairs | Not deductible for CGT |
Common situations
It was your main home
Usually no CGT, if the garden is under 0.5 hectares and no part was used exclusively for business.
You moved out before selling
The last 9 months of ownership are always exempt. If you lived there and then let it, part of the gain may be taxable.
Inherited from a parent
Your base cost is the probate value. If you sell soon after for a similar price, there may be little or no gain. If the price falls within 4 years, the estate may be able to reclaim IHT.
A rental bungalow
The whole gain is taxable, less the annual exemption.
Example
Jean inherited her mother’s bungalow at a probate value of £280,000. She sells it 2 years later for £310,000, with £6,000 of selling costs. The gain is £24,000. After the £3,000 exemption, £21,000 is taxable. At 24%, that is £5,040. If her income is lower, part may be taxed at 18%.
Reporting and paying
- Report on HMRC’s “Report and pay Capital Gains Tax on UK property” service within 60 days
2. Pay the estimated CGT at the same time
3. Also include the gain on your Self Assessment return, if you file one
Reducing the bill
- Use a spouse’s annual exemption and lower tax band, by transferring a share before the sale
- Time the sale for a year with lower income
- Offset capital losses
- Deduct all allowable costs
Mistakes when selling a bungalow
Sellers often miss the 60-day reporting deadline because the conveyancer doesn’t mention it, or deduct repair and maintenance costs that are not allowed for CGT. Families who sell a parent’s former home sometimes use the wrong base cost: it is the probate value, not what the parent paid. If the bungalow was empty for a while before sale, only the last 9 months are covered automatically, so work out the taxable share carefully.
Frequently asked questions
Is there CGT if I sell my late parent’s bungalow at the probate value?
No gain means no CGT. Keep the valuation.
Do pensioners pay less CGT?
No special relief for age, but lower income means more of the gain may be taxed at 18%.
Can I avoid the 60-day deadline?
No. Late reporting leads to penalties and interest.
Does the size of the garden matter?
Yes. Land over 0.5 hectares may not be fully covered by relief.
Related: can a buy-to-let be exempt from CGT and stamp duty on inherited property.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with capital gains tax on property sales. See our property tax 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.
