Part of our complete guide to landlord tax.
When CGT applies
If you sell a rental property, a second home, or any residential property that isn't your main home, you're likely to owe Capital Gains Tax (CGT) on the profit. This is separate from income tax on rent received while you owned it, CGT is a one-off tax on the gain made when you dispose of the asset.
How the gain is calculated
In simple terms:
Gain = Sale price − Purchase price − Allowable costs − CGT allowance
Allowable costs include buying and selling costs (solicitor fees, estate agent fees, stamp duty paid on purchase), and the cost of capital improvements, extensions, a new roof, structural work, but not routine repairs or maintenance, which aren't deductible.
The allowance and rates
- CGT allowance: £3,000 per person for 2026/27, the first £3,000 of gain is tax-free
- Basic rate taxpayers: 18% on residential property gains within the basic rate band
- Higher/additional rate taxpayers: 24% on residential property gains above the basic rate band
Use our property CGT calculator to work out your actual liability based on your purchase price, sale price, costs, and income level.
Key point: the 60-day deadline. You must report and pay CGT on UK residential property within 60 days of completion, through HMRC's online CGT on UK property service. This is far faster than your normal self assessment deadline, and penalties apply for missing it, separate from the gain itself being reported again on your annual return.
What doesn't count
Your main home is usually covered by Private Residence Relief and exempt from CGT entirely. This article is about property that was never your main residence, or periods when it wasn't, a rental property, a holiday home, or a property you lived in for only part of your ownership.
If you're a landlord thinking of selling
If mortgage interest relief (Section 24) has been part of your ownership costs, it's worth reviewing that alongside any sale, see our guide on Section 24 for landlords. And if you're weighing up incorporating a property portfolio instead of selling individual properties, that's a different, often more complex calculation entirely.
Selling soon? Book a free consultation before you complete, there's often more that can be done to reduce the gain before the sale than after it.
Frequently asked questions
What is the CGT allowance for 2026/27?
£3,000 per person. Any gain above this, after deducting costs and reliefs, is taxable at the residential property CGT rates.
How quickly must I report and pay CGT on a property sale?
Within 60 days of completion, using HMRC's online CGT on UK property return. This is separate from, and much faster than, your normal self assessment deadline.
Can I deduct anything from the gain?
Yes, the original purchase price, buying and selling costs (solicitor and agent fees, stamp duty), and the cost of capital improvements (not routine repairs) can all reduce the taxable gain.
Does this apply to my main home too?
Usually not, Private Residence Relief exempts your main home from CGT in most cases. This applies to rental property, second homes, and periods where a property was not your main residence.