Capital gains tax when selling a rental property: What landlords pay in 2026/27

Key takeaways

If you're selling a buy-to-let property in the 2026/27 tax year, remember these key points:

• Residential property gains are generally taxed at 18% or 24%, depending on your taxable income.
• Each eligible individual has an annual exempt amount of up to £3,000, provided it has not already been used against other gains.
• You can usually deduct allowable purchase costs, selling costs and qualifying capital improvements when calculating your gain.
• For most property sales, the exchange date determines the Capital Gains Tax tax year.
• If Capital Gains Tax is payable, you will normally need to report the sale and make a payment on account within 60 days of completion.
• Reliefs such as Private Residence Relief and allowable capital losses may reduce the amount of tax you pay.

Getting these points right can help ensure your Capital Gains Tax bill is accurate and avoid unnecessary penalties, interest or unexpected costs.

One note before we start. Tax depends on your personal circumstances, and this article is general information rather than advice. For anything beyond a straightforward disposal, speak to an accountant before you exchange contracts, not after.

Capital Gains Tax (CGT) can be one of the largest costs an individual landlord faces when selling a rental property. Mistakes commonly arise from using the wrong deductible costs, overlooking available reliefs or missing the reporting deadline.

This guide explains the rules for the 2026/27 tax year, including the current rates, how to calculate your gain, the reliefs that may be available and the important 60-day reporting requirement.

This guide primarily covers UK-resident individuals selling residential rental property they own personally. Different rules can apply to companies, trusts, partnerships, non-UK residents and furnished holiday lets.

Tax depends on your personal circumstances, and this guide is intended as general information rather than personal tax advice. If your situation is anything other than straightforward, it is worth speaking to an accountant or tax adviser before contracts are exchanged.

Capital Gains Tax rates for 2026/27

Capital Gains Tax on residential property is charged at two rates:

• 18% for gains that fall within your unused basic rate Income Tax band.
• 24% for gains above that threshold.

Your taxable gain is effectively added on top of your taxable income. If part of your gain falls within your remaining basic rate band, that portion is generally taxed at 18%, with the remainder taxed at 24%.

Each eligible individual has an annual exempt amount of up to £3,000 for the 2026/27 tax year, provided it has not already been used against other gains during the same tax year. Unlike previous years, any unused annual exempt amount cannot be carried forward.

How to calculate Capital Gains Tax on a buy-to-let property

Your gain is not simply the difference between what you bought the property for and what you sold it for.

Instead, you generally calculate it as follows:

• Start with the sale price.
• Deduct the amount you originally paid for the property.
• Deduct allowable acquisition costs, such as Stamp Duty Land Tax, legal fees and certain survey costs connected with the purchase.
• Deduct allowable selling costs, such as estate agent fees and conveyancing fees.
• Deduct qualifying capital improvement costs, such as building an extension or converting a loft. The expenditure must have enhanced the property, and the improvement must normally still form part of the property when it is sold. Routine repairs, maintenance and like-for-like replacements do not usually qualify as capital improvements, particularly where the costs were, or could have been, claimed against rental income.
• Deduct your available annual exempt amount.

The amount that remains is your taxable gain.

Example calculation

Suppose you:

• Bought a rental property for £180,000.
• Paid £4,000 in allowable buying costs.
• Spent £15,000 building an extension.
• Sold the property for £270,000.
• Paid £6,000 in selling costs.

Your gain would be calculated as:

£270,000 − £180,000 − £4,000 − £15,000 − £6,000 = £65,000

After deducting your £3,000 annual exempt amount, your taxable gain would be £62,000.

Assuming all the expenditure qualifies, no other reliefs or losses apply, the annual exempt amount has not been used elsewhere, and the whole taxable gain falls within the 24% rate, the Capital Gains Tax due would be: £62,000 × 24% = £14,880

What if you jointly own the property?

Joint owners normally calculate and report their own share of the gain according to their beneficial ownership of the property.

Each owner has their own:

• annual exempt amount;
• available capital losses; and
• Income Tax and Capital Gains Tax rate bands.

For example, if a married couple each own 50% of a property, they would normally each calculate their own share of the gain separately. Depending on their individual tax positions, this can reduce the overall tax bill.

The 60-day reporting and payment deadline

One of the easiest mistakes to make is missing the Capital Gains Tax reporting deadline.

If you are a UK resident and Capital Gains Tax is payable on the sale of a UK residential property, you will normally need to:

• report the disposal to HMRC; and
• make a payment on account of the tax due

within 60 days of completion using HMRC's online Capital Gains Tax on UK property service.

This requirement is separate from your Self-Assessment tax return. The payment made within 60 days is based on the best estimate available at the time, and your final Capital Gains Tax position may later be reconciled through your Self-Assessment return if required.

It is important to understand that:

• the exchange date normally determines which tax year the disposal falls into for Capital Gains Tax purposes; and
• the completion date starts the 60-day reporting and payment deadline.

Missing the deadline may result in penalties and interest.

The best approach is to prepare your figures well before completion. Your conveyancer can usually confirm the expected completion date in advance, while your purchase records, improvement invoices and selling costs should already be available.

Note: Different reporting rules can apply to non-UK residents.

Reliefs that may reduce your Capital Gains Tax bill

Private Residence Relief

If the property was your only or main residence before it became a rental property, you may qualify for Private Residence Relief.

Generally, the gain relating to the period you lived in the property as your main home is exempt from Capital Gains Tax. In addition, the final nine months of ownership usually qualify for relief if the property was your main residence at some point.

For example, if you owned a property for ten years, lived in it as your main home for the first five years and then rented it out for the remaining five years, approximately five years and nine months of ownership could qualify for relief, subject to the detailed rules.

Lettings Relief

Lettings Relief still exists but now applies only in limited circumstances.

It is generally available only where you shared occupation of the property with your tenant while it was your main residence.

For most landlords who moved out before renting the property, Lettings Relief is no longer available.

Capital losses

Allowable capital losses can reduce the amount of Capital Gains Tax you pay.

Current-year losses are generally set against gains in the same tax year. Unused losses from earlier years may also be available, provided they have been properly reported to HMRC.

The order in which losses and the annual exempt amount are used can affect your final tax bill, so professional advice may be worthwhile where significant gains or losses are involved.

Selling an investment property: timing and planning points

A few legitimate planning opportunities may help reduce or manage your tax bill, but they need to be considered before contracts are exchanged.

For most property sales, the disposal takes place for Capital Gains Tax purposes when unconditional contracts are exchanged. Exchanging shortly after 6 April, rather than shortly before, will therefore normally place the gain in a new tax year. The 60-day reporting and payment deadline still runs from the date of completion.

Transfers between spouses or civil partners who are living together are generally made on a no-gain/no-loss basis. A genuine transfer completed before the property has been disposed of may allow both owners' annual exempt amounts, available losses and Capital Gains Tax rate bands to be considered. However, the recipient takes over the transferring owner's original acquisition cost for Capital Gains Tax purposes, and mortgage, Stamp Duty Land Tax and beneficial ownership issues may also need to be considered.

Your taxable income can also affect how much Capital Gains Tax you pay. Selling in a year when your income is lower may mean that more of the gain falls within the 18% residential property rate rather than the 24% rate.

None of these planning opportunities remove tax outside the rules, but they can make a meaningful difference in the right circumstances. If you are considering changing ownership or timing a sale for tax purposes, seek professional advice before exchanging contracts.

Where Capital Gains Tax fits into the wider selling process

Capital Gains Tax is only one part of selling a rental property.

You will also need to prepare tenancy documentation where applicable, instruct an estate agent, find and appoint a conveyancer and complete the legal process.

The legal timetable is important for tax purposes too. The exchange date usually determines the Capital Gains Tax tax year, while the completion date starts the 60-day reporting deadline. Your conveyancer's completion statement will also provide many of the figures you'll need when calculating your allowable selling costs.

If you're at the beginning of the process, our complete guide to conveyancing explains how the legal side of selling works, what it costs and what to expect.