01

CGT rates on residential property 2026

Residential property gains are taxed at 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers. The rate depends on total taxable income plus the gain in the year of disposal - not just salary. A basic rate taxpayer with a large gain may find part taxed at 24% once the basic rate band is exhausted.

The tax is calculated on the net gain - sale proceeds minus original acquisition cost plus qualifying improvement expenditure. Professional fees on acquisition and disposal are deductible. Enhancement expenditure that adds value at the time of sale is deductible but general repairs and maintenance are not.

02

The 60-day reporting rule

CGT on UK residential property must be reported and paid within 60 days of completion - not at year-end via self-assessment. Failure triggers automatic penalties: 100 for late filing; additional daily penalties after three months; and interest on unpaid tax.

Practically the 60-day rule means engaging a tax adviser before completion not after. The 60-day payment is credited against the final self-assessment liability - if you overpay HMRC refunds the difference.

03

Private residence relief

Private residence relief (PRR) means no CGT applies on the sale of your main home. Every period of genuine occupation as the main residence qualifies plus the final nine months of ownership always qualifies regardless of occupation.

For properties that have been both a main residence and a letting at different times the gain is apportioned with the main residence period exempt and the letting period taxable. PRR is the most valuable CGT exemption in property.

04

Spousal transfers and annual exemption

Transfers between spouses and civil partners are made at no gain/no loss - no CGT arises on the transfer itself. Before selling an investment property transferring a portion to a spouse who is a basic rate taxpayer can significantly reduce the overall CGT bill. For a couple owning property jointly both annual exemptions can be used sheltering 6,000 of gain before any tax applies.

If one spouse is higher rate and the other basic rate transferring to a 50/50 split before sale means half the gain is taxed at 18% rather than 24% - a saving of 3,000 on a 100,000 gain.

05

Capital losses and timing

Capital losses from other disposals can be offset against property gains in the same tax year. Losses from previous years carried forward can also be used. A portfolio review before a major property disposal identifying investments that could be sold at a loss is a valuable planning exercise. Unreported losses from up to four previous years can be backdated on self-assessment.

Timing the disposal across two tax years - exchanging in March and completing in April - uses two years annual exemptions and potentially two years basic rate bands reducing the overall tax rate.