Capital Gains Tax on Property

When selling property creates a Capital Gains Tax bill, how Private Residence Relief works, and which records to keep.

Reviewed against official HMRC guidance

Tax year
2026/27
Last reviewed
August 2026
Reading time
7 min

When property creates a capital gain

Who this guide is for: For people selling (or otherwise disposing of) UK property that may not be fully covered by Private Residence Relief — especially investment lets and second homes.

Selling (or otherwise disposing of) a property that is not fully covered by Private Residence Relief can create a Capital Gains Tax liability.

Investment properties and second homes are the usual examples. For the general Capital Gains Tax workflow on shares and other assets, see Capital Gains Tax Explained.

Working out the gain (structure)

  1. Step 1Disposal proceeds
  2. Step 2Minus costs and improvements
  3. Step 3Apply reliefs
  4. Step 4Offset losses and Annual Exempt Amount
  5. Step 5Tax remaining gain
Structural steps only — rates and the Annual Exempt Amount come from GOV.UK for your disposal date.
  1. Disposal proceeds (usually sale price)
  2. Minus allowable purchase and improvement costs
  3. Minus selling costs
  4. Apply reliefs (for example Private Residence Relief)
  5. Deduct allowable losses and the Annual Exempt Amount
  6. Tax the remaining gain at the property Capital Gains Tax rates for your band

Calculate CGT on a residential-property disposal Use the Capital Gains Tax Calculator

Records to keep

  • Completion statements from purchase and sale
  • Invoices for capital improvements
  • Evidence of lettings periods if relief is restricted

Related reading

For share and fund disposals, see Capital Gains Tax Explained. For how losses offset gains, see Capital Losses Explained. For ongoing rent, see Rental Income Tax Explained and Buy to Let Tax Explained. For Stamp Duty Land Tax on a purchase, use the Stamp Duty Calculator.

Frequently asked questions

Do I pay Capital Gains Tax when I sell my main home?

Often no, if Private Residence Relief fully covers the gain. Partial lets, annexes, long absences or large grounds can reduce relief — check GOV.UK.

Is Capital Gains Tax the same as Income Tax on rent?

No. Rent is Income Tax on property income. Capital Gains Tax applies when you dispose of the property and realise a gain.

How quickly must I report a residential property gain?

UK residential property disposals often have a shorter reporting and payment window than the normal Self Assessment timetable, and not every disposal follows the same route. Confirm the current deadline and reporting method on GOV.UK for your completion date. A tax estimate is separate from filing.

What costs reduce the gain?

Purchase costs, allowable improvement expenditure and selling costs can reduce the chargeable gain. Day-to-day repairs claimed against rent are not also deducted again as capital.

Official sources

Related calculators

Related guides

Next steps

This guide is for general information only. It is not tax, legal or financial advice. Always check the official guidance for your situation.