Capital Gains Tax on Property Sales: Landlord Guide

When Does CGT Apply?

Capital Gains Tax applies when you sell (or dispose of) a property that is not your main residence for more than you paid for it. This includes:

• Buy-to-let properties
• Second homes
• Holiday homes
• Commercial property
• Land

Your main residence is usually exempt under Private Residence Relief.

CGT Rates on Residential Property (2025/26)

• Basic rate taxpayers: 18%
• Higher rate taxpayers: 24%

Your CGT rate depends on your total taxable income plus the gain. If adding the gain pushes you from basic to higher rate, part of the gain is taxed at 18% and part at 24%.

Calculating Your Gain

The formula is:

Sale price - Allowable costs = Chargeable gain

Allowable Costs Include:

Purchase costs:

• Original purchase price
• Stamp Duty paid on purchase
• Solicitor fees on purchase
• Survey fees

Improvement costs:

• Extensions and conversions
• New bathrooms or kitchens (if they enhanced the property, not like-for-like repairs)
• Loft conversions
• Any capital expenditure that enhanced the property's value

Selling costs:

• Estate agent fees
• Solicitor fees on sale
• EPC costs for the sale

What Is NOT an Allowable Cost

• Repairs and maintenance (these are deducted from rental income instead)
• Mortgage interest
• Insurance
• Any costs already claimed against rental income

The Annual Exempt Amount

For 2025/26, the CGT annual exempt amount is £3,000 per person. This is deducted from your gain before calculating tax.

If you jointly own a property with a spouse, you each have your own £3,000 exemption — so £6,000 in total can be sheltered.

Reporting and Payment

Since April 2020, UK residential property disposals must be reported to HMRC within 60 days of completion. Any CGT due must also be paid within 60 days.

This is a major change from the old system where you could wait until your Self Assessment tax return. Missing the 60-day deadline incurs late filing penalties and interest.

You report through the HMRC Capital Gains Tax on UK Property service online. You will still include the disposal on your Self Assessment tax return, but the 60-day report and payment come first.

Reliefs and Exemptions

Private Residence Relief

If you lived in the property as your main home at any point, you may qualify for partial Private Residence Relief. The last 9 months of ownership are always exempt (regardless of whether you lived there), and periods of actual residence are fully exempt.

Letting Relief

If part of the gain qualifies for Private Residence Relief and you also let the property, you may qualify for Letting Relief — up to £40,000. However, since April 2020, this only applies if you shared the property with the tenant (not if the whole property was let separately).

Losses

Capital losses from other disposals in the same tax year can be offset against your property gain. Unused losses from previous years can also be brought forward.

How Accounted Helps

Accounted tracks your property income and expenses, and can help you prepare for CGT:

• Improvement records — track capital expenditure separately from repairs
• Cost tracking — purchase costs and improvement costs stored for when you sell
• Tax planning — understand your income position to estimate your CGT rate

Visit our pricing page for details.

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CGT on property is a big number. Get the calculation right. Sign up for Accounted and let Penny help you track costs and plan for property disposals.