UK Tax on Selling Inherited Property Guide 2026/27
Selling an inherited home in 2026/27: probate value as your CGT base cost, 18%/24% rates, the 60-day report and Private Residence Relief.
Inheriting a UK property is not taxed as income. If you sell it, Capital Gains Tax is charged on the rise in value from the date of death to the sale, at 18% or 24% depending on your income, after a £3,000 annual exempt amount. Tax on UK residential property must be reported and paid within 60 days of completion. Rates and allowances are from GOV.UK for 2026/27.
Frequently asked questions
Is inherited property taxable?
Receiving an inheritance is not income, so there is no Income Tax on it. Any Inheritance Tax is dealt with by the estate before the property passes to you. What you can owe is Capital Gains Tax when you later sell: the gain is measured from the property's value at the date of death (the value used for probate or Inheritance Tax) to the sale price, less allowable costs (TCGA 1992 s.62; GOV.UK "work out your gain"). If you let the property before selling, the rent is taxable income too.
How much CGT is due on an inherited house sold later?
Illustration: probate value £400,000, sold for £450,000, with £8,000 of estate agent and solicitor fees. Gain £42,000. After the £3,000 annual exempt amount, £39,000 is taxable. If all of it fell above your basic rate band the tax would be £9,360 at 24%; if all of it fell within the band, £7,020 at 18%. Gains that straddle the band are split between the two rates (GOV.UK CGT rates).
Can living in the inherited property reduce CGT?
Yes, if it becomes your only or main residence. Private Residence Relief covers the periods you lived there as your main home, and the last 9 months of ownership always qualify provided it was your main residence at some point (TCGA 1992 s.223; GOV.UK "living away from your home"). The relief is time-apportioned: if you owned it for 5 years and lived there for the first 3, about 3.75 of the 5 years qualify, so roughly 75% of the gain is relieved. Moving in purely to secure relief can be challenged, since relief needs genuine residence.
How is an inherited rental property taxed?
While the estate is still being administered, the personal representatives pay Income Tax on the rent: estates pay 20% on non-dividend income and get no allowances (GOV.UK "Dealing with the estate"). Once the property passes to you, the rent is yours and is taxed at your own rates. From April 2027 property income gets its own rates of 22%, 42% and 47% for taxpayers in England and Northern Ireland, and mortgage-interest relief rises to 22% (HM Treasury Budget 2025 explainer). For Scottish and Welsh taxpayers the property income rates from 2027/28 are for the Scottish Parliament and the Senedd to set (Finance Act 2026 s.8 and Sch 2; SI 2026/1023). Neither had set them as at 15 October 2026: the Welsh Government plans to publish its draft 2027-28 Budget on 17 November 2026 and the Scottish Government its draft 2027-28 Budget on 3 December 2026. On sale, the base cost is still the probate value plus capital improvements.
When must I report and pay CGT on a property sale?
If you are UK resident and there is tax to pay on UK residential property, you must report and pay it within 60 days of completion, using a Capital Gains Tax on UK property account (Finance Act 2019 s.14; GOV.UK "report and pay"). If you already file Self Assessment you also include the sale on your return. HMRC may charge interest and a penalty if you report or pay late. If your total gains are within the annual exempt amount, a UK resident does not need to report online.
How does CGT work when several heirs sell together?
Each beneficiary reports the gain on their own share and uses their own annual exempt amount and rate (GOV.UK "If your property was jointly owned"). Illustration: three siblings inherit a house valued at £600,000 and sell it for £750,000. Each has a gain of £50,000; after the £3,000 exemption, £47,000 each is taxable at 18% within the basic rate band and 24% above it, depending on each sibling's income.
What if the estate sells the property instead of me?
If the personal representatives sell before passing the property on, the estate pays any CGT on the rise in value since death, at 24% (GOV.UK CGT rates for personal representatives), and must report UK residential property within 60 days. No CGT arises from the estate when the property is transferred to a beneficiary instead (GOV.UK "Dealing with the estate"). Which route costs less depends on the beneficiaries' own rates and allowances.