How much Capital Gains Tax do I pay when I sell a rental property?

In 2026-27 you pay 18% on the part of your gain within your unused basic rate band and 24% above it, after a £3,000 tax-free allowance. You report and pay within 60 days of completion.

Capital Gains Tax is charged on the gain, not on the sale price. For a buy-to-let, the gain is broadly what you sold it for less what you paid and the costs of buying, selling and improving it. GOV.UK gives the 18% and 24% rates for gains from 6 April 2026, and the allowance for 2026-27 is £3,000. The rules below were checked on GOV.UK on 16 October 2026.

Rates and allowance for 2026-27

To find your rate, GOV.UK says to take your taxable income (income less your Personal Allowance), deduct the £3,000 allowance from your gains, and add the rest on top. Whatever still fits under £37,700 is taxed at 18%. The rental profit you make in the same tax year counts as taxable income, so a good year of rent can push more of the gain into 24%.

What you can deduct

GOV.UK says you can deduct the costs of buying, selling and improving the property, including estate agents' and solicitors' fees and improvement work such as an extension. HMRC's Capital Gains Manual lists the allowable incidental costs of buying and selling as professional fees (surveyor, valuer, agent, legal adviser), the costs of transfer including Stamp Duty Land Tax, advertising to find a buyer, and the cost of a valuation needed for the calculation.

Normal maintenance such as decorating does not count. Nor do mortgage interest and other running costs, which belong in your rental accounts. Allowable capital losses from other disposals are taken off your gains before the allowance.

A worked example

Sarah lives in England and sells a buy-to-let flat, completing on 10 December 2026. She bought it for £180,000 and paid £4,000 in buying costs, including solicitor's fees and Stamp Duty Land Tax. She later spent £18,000 on a loft conversion. She sells for £285,000 and pays £5,500 in agent's and solicitor's fees. She never lived in the flat.

Her taxable income for 2026-27, wages plus rental profit less her Personal Allowance, is £30,000. That leaves £7,700 of her £37,700 basic rate band.

• £7,700 at 18% = £1,386
• £66,800 at 24% = £16,032
• Capital Gains Tax due: £17,418

If Sarah were a higher-rate taxpayer, the whole £74,500 would be taxed at 24%, giving £17,880. Her 60-day deadline is 8 February 2027.

If you once lived there

Private Residence Relief can cover part of the gain on a former home. You get relief for the years you lived in it as your main home, plus the last 9 months you owned it even if it was let then. The relief is the same share of the gain.

For example, if you owned a house for 10 years, lived in it for the first 3 and let it for the rest, you get relief for 3.75 years, which is 37.5%. On an £80,000 gain, £30,000 is covered and £50,000 is chargeable, before the £3,000 allowance.

Letting Relief, of up to £40,000, applies only if you lived in the home at the same time as your tenant. Having a lodger who shares your living space does not count as letting out your home.

What this means for you

Work out the likely tax before you agree a sale, because the money is due within 60 days of completion, not on 31 January. Gather the purchase completion statement, receipts for any improvements and the sale costs before completion.

If you are already registered for Self Assessment, GOV.UK says you also include the details of the sale in your tax return for that year, as well as the 60-day report.

Steps to report and pay

1. Find the dates: when you got the property, when you exchanged contracts on the sale, and the completion date.
2. Work out your gain on your own share, deducting buying, selling and improvement costs.
3. Take off any Private Residence Relief, Letting Relief, capital losses and the £3,000 allowance.
4. Estimate your taxable income for the tax year to split the gain between 18% and 24%.
5. Sign in to, or create, a Capital Gains Tax on UK property account and report the sale within 60 days of completion.
6. Pay the tax by the same deadline and keep a copy of the return.

Selling a let may also change your rental income for Making Tax Digital: the free MTD check shows whether it applies, and the landlord section has more guides.