Capital Gains Tax on Rental Property: Rates, the 60-Day Rule & Reliefs

Selling a rental property usually means a Capital Gains Tax bill — and a tight deadline to pay it. Here’s how CGT on property works in 2025/26, the reliefs that can cut it, and the 60-day rule that catches landlords out.

What you’re taxed on

Capital Gains Tax is charged on your gain — broadly the sale price minus what you paid, minus your allowable costs. It’s not the whole sale proceeds, just the increase in value.

From that gain you deduct the annual exempt amount (£3,000 for 2025/26), and the rest is taxable.

The rates for 2025/26

Residential property has its own CGT rates:

Band	Rate
Within your basic-rate band	18%
Above the basic-rate band	24%

Crucially, the gain stacks on top of your income to decide how much falls into each band — so a large gain can be partly taxed at 18% and partly at 24%. Our free Capital Gains Tax calculator works it out.

The 60-day rule — don’t get caught

This is the one landlords most often miss. For UK residential property, you must report the gain and pay the tax within 60 days of completion, through HMRC’s dedicated online service. That’s far tighter than the usual 31 January Self Assessment deadline, and late reporting brings penalties.

Because 60 days goes quickly around a sale, it’s worth working out the figure — and lining up the cash — before you complete.

Costs you can deduct

You reduce the gain with:

Buying and selling costs — legal fees, the stamp duty you paid on purchase, estate agent fees
Capital improvements — an extension or significant upgrade (but not routine repairs, which are income expenses, and not mortgage interest)

Keeping records of these from the day you buy can save thousands when you sell.

The reliefs that can help

Private Residence Relief — if the property was ever your main home, the period you lived there (plus the final 9 months) is usually exempt
Annual exempt amount — £3,000 tax-free each year
Spousal transfers — transferring a share to a spouse before sale can use both annual allowances and both tax bands
Capital losses — losses on other assets can be offset

Plan the sale, don’t just react to it

The difference between a well-planned and an unplanned property sale can be substantial — the 60-day deadline, the reliefs, the timing across tax years, and using both spouses’ allowances all matter. Our Capital Gains Tax service handles the 60-day return for you, and our accountants for landlords plan the disposal so you claim every relief and keep the bill as low as legitimately possible. For the full picture of property tax, see our landlord tax overview.

Frequently asked questions

How much Capital Gains Tax do I pay on a rental property?

For 2025/26, gains on residential property are taxed at 18% within your basic-rate band and 24% above it, after deducting the £3,000 annual exempt amount. Your income determines how much of the gain falls into each band. You can also deduct buying and selling costs and the cost of capital improvements.

When do I have to pay CGT on a property sale?

You must report the gain and pay the Capital Gains Tax within 60 days of completion using HMRC's online Capital Gains Tax on UK property service. This is much tighter than the normal Self Assessment deadline, and missing it brings penalties — so plan for it before you sell.

Do I pay CGT when I sell my own home?

Usually not — your main residence is normally covered by Private Residence Relief, so there's no CGT. The tax applies to second homes, buy-to-lets and properties you've let out. If a property was your home for part of the time you owned it, partial relief may apply.

What can I deduct from a property capital gain?

You can deduct the costs of buying and selling (legal fees, stamp duty paid on purchase, estate agent fees) and the cost of capital improvements (like an extension), but not routine repairs or mortgage interest. These reduce the taxable gain. We make sure every allowable cost is captured.

How can I reduce Capital Gains Tax on a rental property?

Use your annual exempt amount, deduct all allowable costs and improvements, offset any capital losses, consider transferring a share to a spouse to use both allowances, and time the disposal across tax years where possible. Reliefs like Private Residence Relief may apply if you ever lived there.

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Reviewed by Provense Accountants

Written and reviewed by our team of qualified accountants (AAT-regulated). This guide is general information, not personal tax advice — book a free consultation for advice on your situation.