Capital Gains Tax on residential property: what you need to know

When you make a gain after disposing of an asset, you’ll be aware of the need to pay Capital Gains Tax (CGT). But do you know the full rules around CGT for residential property?

If you’re an individual selling your own property – rather than a business selling a property owned by the company – the reporting and payment rules for this gain are different from those for most other gains, and the deadlines are shorter.

When a residential property gain needs reporting

It’s not just a normal residential property sale that can trigger the need to report a gain. Other situations where you may need to report include:

• Transferring the property into a limited company
• Moving the property into a trust
• Gifting the property to someone other than your legal spouse
• Disposing of the property in any other way, apart from an exempt transfer between spouses.

Selling your main home

You usually have no Capital Gains Tax to pay when you sell your home if it has been your only home and your main home for the whole time you’ve owned it, you haven’t let any of it out (a lodger doesn’t count), no part of it has been used only for business, the grounds are under 5,000 square metres, and you didn’t buy it just to make a gain.

In all other cases, you may have Capital Gains Tax reporting and payment issues to consider. So there’s real value in understanding a little more about how the process works.

Reporting and paying: the 60-day deadline

Generally, most capital gains are reported as part of the annual Self Assessment tax return, and any tax that’s due is payable by the end of January following the tax year in which the gain is made. Residential property is different.

If you’re a UK resident and sell a UK residential property with Capital Gains Tax to pay, you must report the sale and pay the tax within 60 days of completion (not exchange). You do this through a Capital Gains Tax on UK property account. If you’re not a UK resident, you must report every sale or disposal of UK property or land within 60 days, even if there is no tax to pay.

• To report your gain, you need to create a ‘Capital Gains Tax on UK property’ account, if you don’t already have one. You’ll need a Government Gateway account to do this.
• UK residents don’t need to report through the UK property account if there is no tax to pay, for example because the gain is within the £3,000 annual exempt amount, is covered by losses, or is fully covered by Private Residence Relief. If you’re registered for Self Assessment, you also need to include the sale on your tax return.

Capital Gains Tax rates and the annual exempt amount

For gains made in the 2026/27 tax year, individuals pay Capital Gains Tax at 18% on any gain that falls within their unused basic rate band (£37,700 of taxable income) and 24% on the rest. Since 30 October 2024 these rates have applied to residential property and to most other assets alike. (The higher rate for residential property fell from 28% to 24% on 6 April 2024.) The first £3,000 of total gains in the tax year is covered by the annual exempt amount.

To work out which rate or rates apply, add the taxable gain to your other taxable income for the year of disposal. This will usually mean making an estimate, as your other income will not normally be finalised when you work out how much CGT is due.

Working out the gain

• The starting point is to work out the total gain, then how much of that total gain is taxable.
• The total gain is net proceeds less gross costs. Net proceeds is what the property sold for, less associated costs such as estate agent’s fees and legal fees. Gross cost is the original purchase price plus associated costs such as legal fees, Stamp Duty and any capital improvements, such as adding a conservatory or an extension.
• Note: if the property was acquired before April 1982, the gross cost is the market value at 31 March 1982.

Private Residence Relief

The most common relief is Private Residence Relief (PRR). It takes out any gain arising from the period during which the property was your only or main residence. As well as the periods when the property actually was your main residence, certain other periods count as if it was.

These ‘deemed periods’ only apply if the property was your main residence for at least some of the time you owned it. They are:

1. The last 9 months of ownership always count as if you lived there, as long as the property was your main home at some point. If you’re disabled or in long-term residential care and have no other home, it is the last 36 months.
2. The period between buying the property and moving in, treated as residence for up to the first 24 months, if before moving in you were living in your old home while selling it, or you were building, altering or redecorating the new property.
3. Provided that the property was your only or main residence both before and after, the first 36 months of absence for any reason. Periods of absence beyond the first 36 months don’t count for PRR.
4. Provided that the property was your only or main residence before, and that afterwards it was your only or main residence again, or your terms of employment required you to live elsewhere, these periods also count:
   • Any period of employment abroad where all the duties of the employment were performed abroad.
   • The first 48 months (which can be spread over more than one period) where self-employment or the duties of a UK employment required you to live elsewhere. Periods of absence beyond the first 48 months don’t count for PRR.

• The two employment periods above also apply if the absence was because of the work of a spouse or civil partner you were living with.
• Periods of absence before 31 March 1982 are ignored.
• The proportion of your total period of ownership that PRR doesn’t cover is used to work out the proportion of the total gain that is subject to CGT.
• If part of the property is used exclusively for non-residential purposes, that proportion of the total gain is fully subject to CGT. For example, if you use a room only as an office for your business, the gain related to that part of the property is taxable. A room used as a temporary or occasional office is not exclusive business use.

Lettings relief

If you let part of your home, lettings relief may reduce the gain on the part that was let, for the period it was let. Under the current rules it only applies if you lived in the property at the same time as your tenant (shared occupancy). It doesn’t apply if the whole property was let.

The relief is capped at the lowest of:

• the gain from the letting
• the PRR for the same period
• £40,000

Talk to us about your property sale

Checked on 8 October 2026. The government’s Budget on 28 October 2026 may change some of these rules and rates. Please check with us before acting.

As you can see, it’s no walk in the park working out whether CGT is due. Assessing your situation and calculating how much CGT you’ll need to pay can be complex. We can help you calculate any taxable gains and the reliefs available, and make sure you meet the tight reporting deadlines for residential property.

If you’re planning to sell or transfer a residential property, talk to us at the start of the process. We’ll make you aware of any CGT issues and help you plan for them. See our Property & Capital Gains Tax service.

Get in touch to talk through your residential property sale.