How CGT Works on Rental Property
Capital Gains Tax is charged on the gain you make when you dispose of an asset, not on the full sale price. For a rental property, the gain is broadly the sale price less what the property cost you and the allowable costs of buying, improving and selling it.
Costs you can usually deduct include:
- the original purchase price;
- costs of buying, such as Stamp Duty Land Tax and solicitors' fees;
- capital improvements, such as an extension or a loft conversion, but not routine repairs or redecoration;
- costs of selling, such as estate agent, consultancy and solicitors' fees.
Mortgage interest, letting agent fees and day-to-day running costs are not deducted from a capital gain. Those are income items, dealt with in your tax return for the rental business.
Rates and the Annual Exempt Amount for 2026 to 2027
Gains on residential property are added to your taxable income for the year to decide which rate applies (GOV.UK, “Capital Gains Tax rates”).
| Item | 2026 to 2027 |
|---|---|
| Rate on gains within your basic-rate band | 18% |
| Rate on gains above your basic-rate band | 24% |
| Annual exempt amount (per person) | £3,000 |
| Report and pay on UK residential property | Within 60 days of completion |
Because the gain sits on top of your income, a large gain often takes most of it into the 24% rate, even for someone who is normally a basic-rate taxpayer.
A Worked Example
This example is illustrative only and ignores reliefs and losses. A landlord who is a higher-rate taxpayer sells a buy-to-let house in sole name:
| Sale price | £210,000 |
| Less selling costs | −£3,500 |
| Less original purchase price | −£120,000 |
| Less buying costs | −£4,000 |
| Less capital improvements | −£6,000 |
| Gain | £76,500 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £73,500 |
| CGT at 24% | £17,640 |
The tax would normally have to be reported and paid within 60 days of completion. Our Landlord Exit Calculator lets you run your own rough figures property by property, and compare selling in one tax year with phasing the sales.
Jointly Owned Property
Where a property is owned jointly, each owner is taxed on their own share of the gain. Each has their own annual exempt amount and basic-rate band, so the total tax on a jointly owned property can be lower than if one person owned it outright. How the property is held, and in what shares, matters, so check the title and take advice before you sell.
Transfers between spouses or civil partners who live together are generally treated as taking place at no gain and no loss. Any change of ownership shortly before a sale needs careful advice.
Selling a Whole Portfolio
Each property in a portfolio is a separate disposal, and the gains (and any losses) for the tax year are added together. A few points are particularly relevant to portfolio sales:
- Timing. For CGT, the date of disposal is normally the date contracts are exchanged, while the 60-day reporting clock runs from completion. Selling in stages across more than one tax year can mean more than one annual exempt amount and basic-rate band are available.
- Losses. A loss on one property can usually be set against gains on others in the same year, and unused losses can be carried forward if they are reported.
- Apportionment. When a portfolio is sold for one overall price, the price has to be split between the properties. Your solicitor and accountant should agree a reasonable basis.
A phased sale is not right for everyone: it can mean a longer exit and more legal work. We can explain how a partial sale would work alongside the tax advice you receive.
The 60-Day Reporting Rule
If you sell UK residential property and CGT is due, you must normally report the sale and pay the tax within 60 days of completion, using HMRC's online service for reporting Capital Gains Tax on UK property (GOV.UK). If you also complete a Self Assessment return, the gain is included there as well, and tax already paid is taken into account.
Late reports and late payment can lead to penalties and interest. On a portfolio sale with several completions, each one can start its own 60-day period, so agree with your accountant in advance who will prepare each report.
Portfolios Held in a Limited Company
A company does not pay Capital Gains Tax. Gains made by a property company are subject to Corporation Tax, and taking the proceeds out of the company as a dividend or on winding up can create further tax for the shareholders. Some company portfolios are sold by selling the company's shares rather than the properties, which raises different tax and legal questions for both sides. Take specialist advice before deciding which route to use. Our guide to selling a portfolio held in a limited company, SPV or trust explains the routes in more detail.
Other Points to Raise With Your Accountant
- Former homes. If you once lived in a property, Private Residence Relief may reduce the gain, including for the final nine months of ownership. Lettings relief is now only available where you shared occupation with your tenant.
- Incorporation. Moving a portfolio into a company is itself a disposal for CGT. Relief can be available in some circumstances, but it needs specialist advice.
- Estate planning. Property passing on death is treated differently for CGT and may be subject to Inheritance Tax. Selling, gifting and holding all have different consequences.
- Income tax on rents. The government has announced that income tax rates on property income will rise by two percentage points from April 2027, to 22%, 42% and 47% (Autumn Budget 2025). This affects the return from keeping a portfolio, not the CGT on selling it, but many landlords weigh the two together.
This guide is general information about the position in 2026 to 2027 and is not tax advice. Tax and legal treatment depends on your circumstances. Speak to a qualified accountant or solicitor before acting. Portfolio Sales Consultancy does not give tax advice.
Planning a Sale? Start With the Numbers
Your accountant can work out the tax. We can give you an indicative market view of what your portfolio could sell for, so the figures you take to them are realistic.
Frequently Asked Questions
For 2026 to 2027, gains on residential property are taxed at 18% within your basic-rate band and 24% above it, after the £3,000 annual exempt amount (GOV.UK). The gain is added to your taxable income for the year to work out how much falls in each band.
For UK residential property, you normally have to report the sale and pay any CGT due within 60 days of completion, using HMRC's online service. If you complete a Self Assessment return, you include the gain there too.
Possibly. Each tax year has its own annual exempt amount and basic-rate band, so spreading disposals across tax years can reduce the total tax for some landlords. It can also mean a longer, more complicated exit. Speak to a qualified accountant before deciding.
No CGT is due on a loss. A loss can usually be set against gains on other properties in the same tax year, or carried forward to future years if it is reported to HMRC.
No. A company pays Corporation Tax on its gains rather than CGT, and extracting the proceeds can create further tax for the shareholders. Selling the company's shares instead of the properties is sometimes considered. Both routes need specialist advice.