Capital Gains Tax when selling a rental property

You've decided to sell the rental. The price is agreed, the buyer is ready, and then comes the question many landlords leave too late: how much of the profit goes to HMRC, and when? Capital Gains Tax on a let property can run into tens of thousands of pounds, and it's due within 60 days of completion. Here's how it works in 2026.

This guide is general information, not legal or tax advice. Take advice on your own situation.

Do you pay Capital Gains Tax on a rental property?

Usually, yes. Your main home is normally exempt through Private Residence Relief, but a property you've let out usually isn't fully covered. You pay tax on the gain, the difference between what you paid and what you sold for, after allowable costs.

What are the rates?

For gains from 6 April 2025, Taxes for Expats summarises: residential property gains are taxed at 18% or 24%, depending on your income band. The Yorkshire Evening Post explains that basic-rate taxpayers pay 18% on the profit until it takes them into the higher tax band, and 24% on the rest.

Is there a tax-free allowance?

Yes, but it's small. There is an annual exempt amount of £3,000, down from £12,300 in 2022/23.

When do you have to report and pay?

Quickly. HMRC states that if Capital Gains Tax is due on UK residential property, the seller has to report and pay it within 60 days of completion, for completions on or after 27 October 2021. Reporting and payment go through HMRC's online Capital Gains Tax on UK property service.

What costs can you deduct?

• Buying costs, such as solicitor fees and Stamp Duty.
• Selling costs, such as estate agent and legal fees.
• Improvements, such as an extension. Normal repairs and decorating don't count.

What if you used to live in the property?

You may get Private Residence Relief for the years it was your main home, plus a final period. Which? Trusted Traders' worked example shows how the relief is split across the years you lived there and the years you let it. Letting relief is now very limited, and generally only applies where you shared the home with a tenant.

How much could you pay? A worked example

Sterling & Wells gives an example of a higher-rate taxpayer with a taxable gain of £86,000, taxed entirely at 24%. The result: CGT due £20,640, to be reported and paid within 60 days of completion.

How can you plan ahead?

• Keep records of what you paid, improvements, and all buying and selling costs.
• Work out the tax before you agree a sale, so you know what you'll actually receive.
• Set aside the money for the 60-day deadline.
• Take advice, especially if you once lived in the property or own it jointly.

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This is general information, not legal, financial, tax or insurance advice. Market figures are averages as of the date shown above and change every month. Speak to a qualified professional before you act on anything here.