UK CGT on Property: Second Homes, Buy-to-Let & the 60-Day Rule (2025/26)

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CGT on property is one of the most common — and most expensive — capital gains situations UK taxpayers face. This guide explains how second homes and rental property are taxed, how Private Residence Relief protects your main home, the strict 60-day reporting rule, and the reliefs and planning that can reduce the bill on a property disposal.

When does CGT apply to property?

CGT applies when you sell or dispose of residential property that isn’t your main home — second homes, holiday homes, buy-to-let and other rental properties, and inherited property you later sell. You’re taxed on the gain, the increase in value since you acquired it, after deducting allowable costs like purchase price, stamp duty, legal fees and capital improvements.

The gain can be substantial after years of property price growth, and with the annual exemption now just £3,000, most of it is taxable. Commercial property and land also fall within CGT. Calculating the gain correctly — including all allowable acquisition and improvement costs — is the foundation of getting the tax right and not overpaying.

How does Private Residence Relief work?

Private Residence Relief (PRR) exempts the gain on your only or main home for the period it was your main residence, plus the final period of ownership. For most people selling the home they’ve always lived in, PRR makes the sale entirely CGT-free. The relief is automatic where the property has been your sole main home throughout ownership.

Complications arise where a property wasn’t always your main home — periods of letting, business use, or owning more than one home. In these cases PRR is apportioned, and only the qualifying periods are exempt. People who’ve lived in, then let, a property, or who own multiple homes, need to calculate the relief carefully, as the exempt portion depends on the history of occupation.

What is the 60-day reporting rule?

If you sell UK residential property at a gain, you must report it and pay the CGT within 60 days of completion, using a dedicated HMRC ‘Capital Gains Tax on UK property’ online account. This is entirely separate from your Self Assessment return and its 31 January deadline — the 60-day rule is much tighter and applies even if you also file Self Assessment.

This deadline catches many sellers out, as it requires calculating the gain and the tax quickly after a sale. Missing it triggers penalties and interest. Anyone selling a second home or rental property should prepare the figures in advance and report promptly, ideally with their accountant lined up before completion so the 60-day clock doesn’t run out.

What reliefs apply to property gains?

Beyond PRR, other reliefs can reduce property CGT. Lettings relief may apply in limited circumstances where you’ve let a property that was once your main home. Allowable costs — improvements, buying and selling expenses — reduce the gain. Transferring a share to a spouse before sale uses their allowance and bands, and capital losses on other assets can offset the gain.

For couples, jointly owning a property means two £3,000 annual exemptions and two sets of CGT bands, which can meaningfully cut the tax on a jointly held second home or rental. Timing the sale across tax years, where the property can be sold in stages or transferred, offers further scope. These reliefs and techniques are the main levers for reducing a property CGT bill.

How is inherited property taxed?

Inheriting property doesn’t itself trigger CGT — instead, Inheritance Tax may apply to the estate. When you later sell inherited property, CGT is charged on the gain measured from its value at the date of inheritance (the probate value), not from what the deceased originally paid. So only the increase in value since you inherited it is taxable.

This ‘uplift’ to probate value at death is valuable, as it wipes out the gain accrued during the deceased’s ownership. But selling inherited property you don’t live in still attracts CGT on any gain since inheritance, subject to the 60-day rule. Understanding the interaction between Inheritance Tax on death and CGT on later sale is important for anyone managing an inherited estate.

How can landlords reduce CGT on a portfolio?

Landlords selling rental property face CGT on often substantial gains. Planning options include spreading sales across tax years to use multiple annual exemptions, transferring shares to a spouse, offsetting losses, ensuring all allowable improvement costs are claimed, and considering whether incorporation or other structures suit a larger portfolio — though incorporation has its own tax consequences.

For portfolio landlords, the cumulative CGT on disposing of multiple properties makes planning especially valuable. The shrunken annual exemption and the 18%/24% rates mean tax on a property sale is now significant, so coordinating disposals, ownership and timing across a portfolio — ideally with professional advice — can preserve a meaningful share of the proceeds.

A practical example: selling a buy-to-let

Suppose a higher-rate taxpayer sells a buy-to-let for a £80,000 gain after allowable costs. After the £3,000 annual exemption, £77,000 is taxable at 24%, giving CGT of £18,480, due within 60 days of completion. The gain stacks on their income, and as a higher-rate taxpayer the full amount falls at 24%.

Had the property been jointly owned with a basic-rate spouse, the gain would split, two annual exemptions would apply, and part might fall at 18% — cutting the total bill significantly. The example shows how ownership structure, the 60-day deadline and accurate cost deduction all shape the real tax on a property sale, and why landlords benefit from planning disposals carefully.

How does letting a former home affect CGT?

If you let out a property that was once your main home, Private Residence Relief covers the periods you lived there plus the final period of ownership, while the letting period is generally taxable. Lettings relief may reduce the bill in limited circumstances, but its scope was significantly restricted in recent years, so many landlords who previously relied on it no longer qualify.

The calculation apportions the gain between exempt (residence) and taxable (letting) periods based on the time each applied. People who move out and let their former home, perhaps when relocating for work, need to understand that the property’s CGT-free status erodes over the letting period. Keeping records of occupation dates is essential for calculating the relief accurately when the property is eventually sold.

How does CGT affect non-residents selling UK property?

Non-UK residents are subject to CGT on disposals of UK property, with their own reporting requirements and a 60-day deadline that applies regardless of whether tax is due. The rules bringing non-residents within UK property CGT were introduced to ensure overseas owners pay tax on UK property gains, and they apply to both residential and commercial property.

For internationally mobile individuals and overseas investors in UK property — a common situation for cross-border families and businesses — this means a UK tax obligation on disposal even when living abroad. The interaction with the seller’s home-country tax and any double-taxation treaty adds complexity, making professional advice important for non-residents selling UK property to avoid both double tax and missed deadlines.

Why property CGT planning is worth the effort

Property gains are often the largest capital gains people ever realise, so the tax at stake justifies careful planning. The combination of the 18%/24% rates, the small £3,000 allowance and the strict 60-day deadline means an unplanned property sale can produce a large, immediately payable bill. Planning the ownership, timing and cost calculations in advance can save thousands and avoid penalties.

For landlords and second-home owners especially, coordinating disposals across tax years, using both spouses’ allowances and bands, claiming every allowable cost, and preparing the 60-day report in advance all materially affect the outcome. Property CGT rewards forethought more than almost any other personal tax, which is why engaging with it before a sale completes — not after — is so important.

Common property CGT mistakes to avoid

Typical property CGT errors include missing the 60-day reporting and payment deadline, failing to deduct allowable purchase costs and improvements, miscalculating Private Residence Relief on a property that wasn’t always your main home, and not using both spouses’ allowances on a jointly intended property. Each inflates the bill or risks a penalty.

Avoiding them means preparing the figures before completion, keeping records of all allowable costs and occupation dates, calculating reliefs carefully, and structuring ownership in advance. Given that property gains are often large and the deadline tight, getting these basics right — ideally with an accountant lined up before the sale completes — is what keeps the tax to the legitimate minimum.

How does property CGT interact with rental income tax?

Owning a rental property involves income tax on the rent throughout ownership and CGT on the gain when you sell, so the two taxes bookend a property investment. Decisions made for income tax — like how the property is owned between spouses, or whether to hold it personally or through a company — also affect the eventual CGT position, linking the two.

For landlords, viewing income tax and CGT together across the whole life of an investment leads to better decisions than considering each separately. Ownership structure, in particular, affects both the tax on annual rental profits and the tax on the eventual sale. This whole-life view of property taxation is what allows landlords to structure their portfolios efficiently from acquisition through to disposal.

Should I hold property personally or through a company?

For landlords, whether to hold property personally or through a limited company affects both income tax and CGT. Companies pay corporation tax on rental profits and gains rather than personal income tax and CGT, and the mortgage-interest treatment differs. Incorporating an existing portfolio can itself trigger CGT and stamp duty, so the decision is rarely simple.

The right structure depends on the size of the portfolio, the owner’s tax position, financing, and long-term plans. Larger, growing portfolios sometimes favour a company; smaller holdings often don’t justify the cost and complexity. Because incorporation has significant tax consequences and the calculation is finely balanced, this is a decision that warrants careful modelling and professional advice before committing.

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