Calculate Your Capital Gains Tax on Inherited Property
Work out how much CGT you might owe when selling property you’ve inherited in the UK. This calculator uses the current 2025/26 tax rates and allowances.
Your Capital Gains Tax Calculation
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How to Use This Calculator
Selling an inherited property can be confusing when it comes to tax. This calculator helps you work out exactly what you’ll owe to HMRC based on your specific situation.
Step 1: Enter the Property Values
Start by entering what the property was worth when you inherited it. This is usually the probate valuation used for inheritance tax purposes. Then enter the price you’re selling it for. The difference between these two figures is your potential gain.
Step 2: Add Your Allowable Costs
You can deduct certain costs from your gain. Acquisition costs include solicitor fees, probate costs, and valuation fees when you inherited the property. Improvement costs cover major works like extensions, loft conversions, or new bathrooms that genuinely add value. Regular maintenance like redecorating doesn’t count. Selling costs include estate agent fees, solicitor fees for the sale, and survey costs.
Step 3: Consider Your Ownership Share
If you’re sharing the property with other beneficiaries, enter your percentage share. Each person gets their own CGT allowance, which can significantly reduce the overall tax bill.
Step 4: Enter Your Income Details
Your income tax bracket determines your CGT rate. Basic rate taxpayers pay 18% on residential property gains, whilst higher and additional rate taxpayers pay 24%. If your income plus the gain pushes you into a higher bracket, the calculator splits the tax calculation accordingly.
Step 5: Apply Private Residence Relief
If you lived in the inherited property as your main home for any period, you might qualify for Private Residence Relief. This can eliminate or reduce your CGT liability proportionally to the time you lived there.
How CGT on Inherited Property Works
When you inherit property, you don’t pay Capital Gains Tax at that point. CGT only becomes relevant when you sell the property. The key thing to remember is that you’re only taxed on the increase in value from when you inherited it, not from when the deceased originally bought it.
The Probate Valuation Matters
Your starting point for CGT is the property’s market value at the date of death. This should have been established during the probate process for inheritance tax purposes. If the property was worth £250,000 when you inherited it and you sell for £250,000 a few months later, there’s no gain and therefore no CGT to pay, even after deducting selling costs.
Current Tax Rates for 2025/26
The rates for residential property are 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers. These rates apply after you’ve used your annual CGT allowance of £3,000. This allowance has been reduced significantly in recent years from £12,300, so more people are now liable for CGT.
Property value at inheritance: £300,000
Sale price: £365,000
Acquisition costs: £2,500
Improvements (new kitchen): £15,000
Selling costs: £7,500
Gross gain: £365,000 – £300,000 = £65,000
Less costs: £65,000 – £25,000 = £40,000
Less CGT allowance: £40,000 – £3,000 = £37,000
If you’re a higher rate taxpayer:
CGT due: £37,000 × 24% = £8,880
Joint Ownership Benefits
When multiple people inherit a property, each person calculates CGT on their share independently. This means each person gets their own £3,000 allowance. For two siblings inheriting equally, that’s £6,000 of gains that are tax-free, potentially saving £1,440 in tax.
Common Scenarios Explained
If you make the inherited property your main residence before selling, you may qualify for Private Residence Relief. This relief applies proportionally to the time you lived there. For example, if you lived in it for 2 years out of a 4-year ownership period, you’d get 50% relief on the gain. The final 9 months of ownership always qualify for relief if the property was your main home at some point.
Routine repairs and maintenance don’t count as allowable costs. Redecorating, fixing a broken boiler, or replacing worn carpets aren’t deductible. However, genuine improvements that enhance the property’s value are allowable. This includes extensions, converting a loft into a bedroom, installing central heating for the first time, or building a conservatory. Keep all receipts and invoices as proof.
If you make a loss, you won’t owe any CGT. You should still report the loss to HMRC because you can use it to offset gains on other assets in the same tax year or carry it forward to future years. This can be valuable if you sell other assets at a profit later.
Since October 2021, you must report and pay CGT on UK residential property within 60 days of completion (when the sale completes, not when you exchange contracts). You do this through HMRC’s online Capital Gains Tax on UK Property Account, not your usual self-assessment return. Missing this deadline triggers automatic penalties: £100 fixed penalty, then £10 per day after 3 months (up to £900), plus percentage-based penalties for longer delays.
Inheritance tax and CGT are completely separate. Inheritance tax is paid by the estate based on the total value at death. CGT is paid by you as the beneficiary based on any increase in value since you inherited. You can’t deduct inheritance tax paid from your CGT calculation, but you can deduct costs incurred when inheriting the property, such as solicitor fees and valuation costs.
This calculator is specifically for UK residential property. Different rules apply to overseas property. You’d still need to report and pay UK CGT if you’re a UK resident, but the reporting timeline is different (via self-assessment by 31 January following the tax year, not the 60-day rule). Currency exchange rate fluctuations can also affect your gain calculation.
Ways to Reduce Your CGT Bill
Use Your Spouse’s Allowance
If you’re married or in a civil partnership, you can transfer ownership of the property to your spouse or partner before selling. Transfers between spouses are tax-free. Your spouse can then use their own £3,000 CGT allowance when selling. If you’re both basic rate taxpayers, this could save £540 in tax. You must genuinely transfer ownership, not just on paper.
Consider Making It Your Main Residence
Moving into the inherited property and making it your main residence can qualify you for Private Residence Relief. Even living there for a year or two before selling can significantly reduce your CGT. You need to actually live there as your home, not just register it as your address.
Keep Detailed Records
The more costs you can prove, the less CGT you’ll pay. Keep receipts for everything: solicitor fees, survey costs, improvement works, estate agent fees. Even smaller costs add up. If you spent £500 on various costs but didn’t keep receipts, that could cost you £120 in extra tax (at the 24% rate).
Time Your Other Income
If you’re close to the higher rate tax threshold, consider whether you can reduce your income in the year you sell. Extra pension contributions can reduce your taxable income, potentially keeping you in the basic rate band. The difference between 18% and 24% on a £50,000 gain is £3,000.
Claim All Allowable Losses
If you’ve made losses on other assets (like shares), offset these against your property gain in the same tax year. You can also bring forward losses from previous years. If you forgot to claim losses in earlier years, you can usually still claim them up to 4 years later.
Common Mistakes to Avoid
| Mistake | Why It’s Wrong | Correct Approach |
|---|---|---|
| Using the original purchase price | CGT is based on value at inheritance, not when the deceased bought it | Always use the probate valuation as your starting point |
| Including redecoration costs | Maintenance and repairs aren’t allowable costs | Only claim genuine improvements that add value |
| Missing the 60-day deadline | Results in automatic penalties | Set a reminder for 50 days after completion to file online |
| Not claiming joint ownership allowances | Each owner gets their own £3,000 allowance | Split the gain proportionally among all owners |
| Forgetting about partial residence | You might qualify for relief even for short periods living there | Calculate relief for any time it was your main home |
| Assuming no CGT if selling quickly | Time doesn’t matter; value increase does | Calculate based on actual value change, regardless of timeframe |
Tax Rate Scenarios
Your CGT rate depends on your total income. Here’s how it works in different situations for the 2025/26 tax year.
Scenario 1: Basic Rate Taxpayer
Sarah earns £35,000 per year. After her personal allowance of £12,570, her taxable income is £22,430. This is well within the basic rate band (up to £50,270). When she sells an inherited property with a £30,000 taxable gain, the entire gain is taxed at 18%, giving a CGT bill of £5,400.
Scenario 2: Higher Rate Taxpayer
James earns £65,000 per year, putting him in the higher rate band. When he sells an inherited property with a £30,000 taxable gain, the entire gain is taxed at 24%, resulting in a CGT bill of £7,200.
Scenario 3: Straddling the Threshold
Lisa earns £45,000 per year. Her taxable income after the personal allowance is £32,430. She has £17,840 remaining in the basic rate band (£50,270 – £32,430). When she sells with a £30,000 taxable gain, £17,840 is taxed at 18% (£3,211) and the remaining £12,160 is taxed at 24% (£2,918), for a total CGT of £6,129. This split calculation can make a significant difference.
What Counts as Allowable Costs?
Acquisition Costs (When You Inherited)
- Solicitor and legal fees for transferring the property
- Valuation fees and surveyor costs
- Probate court fees
- Land Registry fees
Improvement Costs (During Ownership)
- Building an extension or conservatory
- Loft conversion creating additional living space
- Installing central heating for the first time
- Complete kitchen or bathroom renovation with higher quality fixtures
- Installing double glazing throughout
- Significant landscaping that adds value (not routine gardening)
- Converting garage into living space
Selling Costs
- Estate agent fees and commission
- Solicitor and conveyancing fees
- Energy Performance Certificate
- Advertising costs
- Survey fees paid by you
What Doesn’t Count
- Redecorating and painting
- Replacing broken boiler or appliances
- Routine repairs and maintenance
- Replacing carpets with similar quality
- General gardening and cleaning
- Buildings insurance
- Utility bills whilst you owned it
- Mortgage interest (if you had a mortgage on it)