Capital Gains Tax on Property: Landlord Guide 2026

Capital Gains Tax (CGT) is tax on the profit you make when you sell a property that is not your main home, such as a buy-to-let or second home. For 2026 to 2027 you pay 18% on gains within your basic rate band and 24% above it, after a £3,000 annual allowance.

Most landlords know CGT exists. Fewer know how much it will be until the sale is agreed, and by then the 60-day deadline is already running. If your sale is meant to fund a deposit, a remortgage or a portfolio change, the tax bill changes how much cash you actually have.

This guide covers rates, the allowance, what you can deduct, reporting and the reliefs that matter for landlords. For wider landlord planning, see our buy-to-let mortgage guide.

Do you pay Capital Gains Tax when you sell a rental property?

Usually, yes, if you made a gain. A buy-to-let or second home is not covered by the main home relief, so the profit after allowable costs is taxable once it is above the £3,000 allowance. The rate depends on your income in the tax year you sell, and you must report and pay within 60 days of completion.

What are the CGT rates and allowance for 2026 to 2027?

	2026 to 2027
Annual exempt amount	£3,000 per person
Rate within the basic rate band	18%
Rate above the basic rate band	24%
Basic rate band	£37,700, shared between your taxable income and your gains

Your gain is added on top of your taxable income. Whatever is left of the £37,700 basic rate band is taxed at 18%, and the rest at 24%. GOV.UK sets out the current Capital Gains Tax rates.

The allowance has dropped sharply. It was £12,300 until April 2023, then £6,000, and it has been £3,000 since April 2024. Joint owners each have their own allowance.

How do you work out the gain?

Start with the sale price and take off:

• What you paid for the property
• Buying costs, such as Stamp Duty, legal fees and survey fees
• Capital improvements, such as an extension or loft conversion. Repairs and like-for-like replacements do not count
• Selling costs, such as estate agent and legal fees

Mortgage interest and running costs are not deducted from the gain. Those go through your income tax return instead. Keep invoices for every improvement, because HMRC can ask for them.

When do you have to report and pay?

For UK residential property you must report the sale and pay the tax within 60 days of completion, using HMRC’s online Capital Gains Tax on UK property service. This is separate from your Self Assessment return, although you still include the gain there. Miss the deadline and you can face penalties and interest. See GOV.UK on how to report and pay Capital Gains Tax on UK property.

Sixty days goes quickly. Speak to your accountant when you agree the sale, not after completion.

Does Private Residence Relief apply?

Private Residence Relief means no CGT on your main home if all of these apply:

• It has been your only or main home throughout your ownership
• You have not let out part of it, although a lodger does not count
• No part is used only for business
• The grounds, including buildings, are under 5,000 square metres
• You did not buy it just to make a gain

Married couples and civil partners can only have one main home at a time. GOV.UK covers this in its guide to tax when you sell your home.

If you lived in a property and later let it out, you usually get relief for the years it was your home plus the final nine months of ownership. The rest of the gain is taxable. Lettings relief now only applies if you shared the home with your tenant, so most accidental landlords cannot use it.

Which situations come up most?

These are illustrative situations, not Option Finance client outcomes.

What else can change your CGT bill?

• Timing. Selling in a year when your income is lower can leave more of the gain at 18%
• Joint ownership. Each owner has their own allowance and their own basic rate band. Transfers between spouses or civil partners are normally tax neutral, but take advice first
• Losses. Capital losses on other assets can be set against the gain
• Spreading sales. Selling properties in different tax years uses more than one annual allowance
• Holiday lets. The furnished holiday let regime ended in April 2025, so holiday lets are now taxed like other lets

Moving properties into a company is not a simple fix. The transfer itself can trigger CGT and Stamp Duty. See our guide to limited company buy-to-let mortgages and get tax advice before acting.

How does CGT affect your mortgage plans?

Remortgaging does not trigger CGT, because you are not selling anything. Some landlords remortgage a buy-to-let to raise money instead of selling, although borrowing has its own costs and rental income still has to cover the new loan. Income tax on rental profit is also changing, with property rates of 22%, 42% and 47% from April 2027. Our guide to buy-to-let tax changes in 2026 explains what that means for affordability.

Frequently asked questions

Speak to Option Finance about selling or refinancing a rental

Whether you are selling, refinancing or reshaping a portfolio, we will tell you straight what the mortgage side looks like once the tax is accounted for.

Book a free initial consultation using the enquiry form below. See also our buy-to-let mortgage advice, our guide to portfolio mortgages for landlords and our guide to remortgaging to buy a second home.