For landlords · 7 min read
Capital gains tax when you sell a rental property
When you sell a rental property at a gain, capital gains tax is charged on the profit after deducting your purchase price, buying and selling costs, capital improvements and your annual exempt amount. Residential property is taxed at higher rates than other assets, and the deadline that catches landlords out is reporting and paying within 60 days of completion — separately from, and earlier than, your Self Assessment return. This is general information, not tax advice; the numbers change most years.
Frequently asked questions
How much capital gains tax will I pay on a rental property?
It depends on the size of the gain after deductible costs and your annual exempt amount, and on whether the gain falls in the basic or higher rate band once added to your income. Residential property is charged at higher CGT rates than most other assets.
When do I have to report and pay CGT on a property sale?
Within 60 days of completion, through a Capital Gains Tax on UK property account. This is separate from and earlier than your Self Assessment return.
Can I deduct the cost of a new kitchen from my capital gain?
Only if it was a genuine improvement rather than a like-for-like replacement. Replacements are repairs, deductible against rental income at the time, not against the capital gain.
Do I pay CGT if I sell at a loss?
No, and the loss can usually be set against other chargeable gains in the same year or carried forward, provided you report it to HMRC.