When you sell a buy-to-let, capital gains tax is usually the biggest single cost of the exit. The rates, the shrinking allowance and a tight reporting deadline all shape the net figure you walk away with. Here is how CGT on a rental property works in 2026 - though for your own numbers you should take professional advice.
How the gain is worked out
Your gain is the sale price minus what you paid for the property, minus allowable costs. For a buy-to-let, deductible costs include the buying and selling expenses - legal fees, the stamp duty you paid on purchase, agent and auction fees - and the cost of qualifying capital improvements, such as an extension or a first fitted kitchen, but not routine repairs, which are income-tax matters. Unlike an inherited property, your base cost is what you actually paid, not a probate value.
The rates and the allowance
For residential property the CGT rates are 18% on gains within your unused basic-rate income band and 24% above it. These were higher for landlords until recently: the residential higher rate fell from 28% to 24% in April 2024. You deduct the annual exempt amount - just £3,000 for 2026 - before the rate applies.
The 60-day rule
For UK residential property you must report the sale and pay the CGT due within 60 days of completion, using HMRC's online service. Missing it brings penalties, so build it into your sale plan rather than leaving it to your annual return.
Reliefs and timing
Private Residence Relief can reduce the bill if the property was once your own main home, covering the period you lived there plus some final-period relief; the old lettings relief is now very limited. Owning jointly with a spouse or civil partner can use two annual allowances and potentially two basic-rate bands. Timing a sale across tax years, or into a year of lower income, can also change the rate. These are situation-specific.
A simple illustration
Bought for £200,000, sold for £260,000, with £8,000 of buying and selling costs and a £10,000 qualifying improvement: the gain is £42,000; after the £3,000 allowance, £39,000 is taxable; at 24% that is £9,360 - less where part falls within your basic-rate band. This is illustrative only; your figures will differ.
Frequently asked questions
How much capital gains tax do I pay selling a buy-to-let?
On residential property, 18% within your unused basic-rate band and 24% above it, after the £3,000 annual allowance. The higher rate fell from 28% to 24% in April 2024.
What can I deduct from a buy-to-let capital gain?
Your purchase price, buying and selling costs (legal fees, the stamp duty paid on purchase, agent fees) and qualifying capital improvements - but not routine repairs, which are income-tax matters.
When do I have to pay CGT on a rental sale?
Within 60 days of completion, reported through HMRC's online service. Late reporting and payment attract penalties.
Can I reduce CGT on my buy-to-let?
Possibly, through Private Residence Relief if you once lived there, using both spouses' allowances and bands, deducting all allowable costs, and timing the sale. Lettings relief is now very limited. Take advice for your situation.