One of the most-searched questions about inheriting a home is whether you will be taxed when you sell it. The short answer: you do not pay capital gains tax simply for inheriting, but you may pay it when you sell, on any increase in value since the date of death. Here is how it works in 2026.
Inheriting is not a CGT event
There is no capital gains tax when you inherit a property - inheritance tax, if any, is the estate's concern, not yours. What matters for your future CGT is your "base cost", and for an inherited property that is the market value at the date of death: the probate value. It is not what the deceased originally paid. This is exactly why an accurate probate valuation matters - it sets the figure every later gain is measured from.
CGT when you later sell
If you sell for more than the probate value, the gain may be taxable. The gain is the sale price minus the probate value minus allowable costs such as selling fees and qualifying improvements. You then deduct the annual exempt amount - £3,000 for 2026 - and pay CGT on what remains: for residential property, 18% on gains that fall within your unused basic-rate income band and 24% on gains above it.
The 60-day reporting rule
Because this is UK residential property, you must report the sale and pay any CGT due within 60 days of completion, through HMRC's online service. This deadline catches many people out, so plan for it before you complete rather than after.
Reliefs that may apply
Some situations reduce or remove the bill: Private Residence Relief if you actually lived in the property as your main home for a period; the estate's own annual exempt amount in the tax year of death; and transfers between spouses or civil partners. These are specific to circumstances, which is why tailored advice pays for itself here.
A simple illustration
Suppose the probate value was £250,000 and you sell 18 months later for £270,000, with £6,000 of selling costs. The gain is £14,000; after the £3,000 allowance, £11,000 is taxable. At 24% that is £2,640 - less if part of the gain falls within your basic-rate band. This is illustrative only; your figures will differ.
Frequently asked questions
Do I pay capital gains tax on an inherited property?
Not for inheriting it. You may pay CGT when you sell, on the increase in value between the date of death (the probate value) and the sale, after the £3,000 annual exempt amount, at 18% or 24% for residential property in 2026.
What is the base cost for CGT on inherited property?
The market value at the date of death, established by the probate valuation - not what the deceased originally paid. This is why an accurate probate valuation matters.
How long do I have to pay CGT on an inherited house?
For UK residential property you must report and pay within 60 days of completing the sale, using HMRC's online service.
How can I reduce CGT on an inherited property?
Deduct allowable costs such as selling fees and qualifying improvements, use the annual exempt amount, claim any Private Residence Relief if you lived there, and consider ownership splits between spouses. Take professional advice for your situation.