Capital Gains Tax on Inherited Property

Inheriting a property doesn’t trigger Capital Gains Tax

When you inherit a home, there’s no Capital Gains Tax to pay at that point. Any tax on the estate itself is Inheritance Tax, which is different. Capital Gains Tax only becomes relevant when you sell the inherited property, as confirmed on gov.uk.

How the gain is worked out

The “gain” is the difference between:

• the property’s value at the date of death (the probate value), and
• the price you eventually sell it for – less allowable costs such as legal fees and any improvements.

If the property has barely changed in value since you inherited it, the gain – and the tax – may be small or nothing.

The rates and allowance for 2026/27

• Residential-property CGT is 18% if the gain falls within your basic-rate band, and 24% above it.
• Everyone has a £3,000 tax-free allowance (annual exempt amount) each year.
• Where the estate’s personal representatives sell during the administration period, they pay 24%, and can use the annual exempt amount for the year of death and the following two tax years.

Rates and allowances are set out on gov.uk.

Reporting and paying

If there’s CGT to pay on a UK residential property, you must report the sale and pay within 60 days of completion. Ways to reduce a bill can include using your annual allowance, deducting allowable costs, and (for couples) owning in joint names – take advice for your situation.

Common questions

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