Guide

Capital Gains Tax on Buy-to-Let Property 2026/27

Written by James Whitfield · Updated August 2026 Checked against 2026/27 HMRC rates

Sell a buy-to-let and Capital Gains Tax hits the profit from purchase to sale - 18% within your basic-rate band, 24% above it - once you've stripped out buying costs, selling costs, capital improvements and the £3,000 allowance.² There's no Private Residence Relief on a rental, and if tax is due you report and pay within 60 days of completion.⁴ Here's the calculation, the costs that count, and the traps landlords fall into.

Key takeaways

Buy-to-let gains are taxed at 18%/24% - the same rates as any other asset since October 2024.²
Deduct SDLT, legal and survey fees, agent fees and genuine capital improvements - but your mortgage balance never reduces the gain.³
The first £3,000 of net gains each year is tax-free; capital losses from other disposals come off before that.¹
If CGT is due, report and pay within 60 days of completion through HMRC's UK Property service - late is an automatic £100 penalty.⁴
Owning jointly, or transferring a share to a spouse before sale, gives each of you a £3,000 allowance and your own rate band.¹

How CGT applies to buy-to-let disposals

A buy-to-let is not your main home, so it does not qualify for Private Residence Relief. CGT can apply to the full gain from purchase to sale, subject to allowable deductions and the annual exempt amount.

The gain is: sale proceeds minus your original purchase cost, minus allowable buying costs, minus selling costs, minus any capital improvement costs.

What counts as an allowable cost?

Buying costs (at acquisition)

Stamp Duty Land Tax (SDLT) paid on purchase
Solicitor/conveyancing fees on purchase
Survey costs at purchase

Capital improvement costs (during ownership)

An extension or conversion that adds value
A new kitchen or bathroom that goes beyond like-for-like replacement

Routine maintenance and repairs - painting, fixing a boiler, replacing a broken window - are not allowable for CGT. They may have been deductible against rental income in the year incurred, but they do not reduce your CGT gain.

Selling costs (at disposal)

Estate agent fees
Solicitor/conveyancing fees on sale

Worked example

James bought a flat in 2015 for £180,000, with £5,000 in stamp duty and legal fees. He spent £5,000 on a refurbishment that qualifies as capital improvement. In 2026 he sells for £240,000, paying £10,000 in estate agent and solicitor fees.

Worked example — flat sold for a £40,000 gain

Sale proceeds	£240,000
Less purchase cost	−£180,000
Less buying costs	−£5,000
Less capital improvements	−£5,000
Less selling costs	−£10,000
Gross gain	£40,000
Less annual exempt amount	−£3,000
Taxable gain	£37,000
CGT if higher-rate (£37,000 × 24%)	£8,880

The rate depends on James's taxable income in the year of disposal. If his taxable income is £40,000, he has used all of his basic-rate band, so the full £37,000 gain is taxed at 24% - CGT of £8,880.

If his taxable income were £30,000, he would have £7,700 of basic-rate band remaining. The first £7,700 of gain is taxed at 18% (£1,386) and the remaining £29,300 at 24% (£7,032) - total CGT of £8,418.

The mortgage does not reduce your gain

Your outstanding mortgage balance does not reduce the CGT gain. CGT is calculated on the difference between sale proceeds and your base cost. The mortgage is a financing arrangement - not a cost of acquiring or disposing of the asset.

Mortgage interest payments are also not deductible against the CGT gain. They may have been claimable against rental income, subject to the finance cost restrictions that came in from 2017, but that is a different calculation.

60-day reporting for UK residential property

Since April 2020, selling a UK residential property with CGT due requires you to report the gain and pay the estimated tax within 60 days of completion. This applies even if you already file Self Assessment.

You report via HMRC's online "Report and pay CGT on UK property" service, which is separate from Self Assessment.

You also need to include the disposal on your Self Assessment return - the 60-day payment is a payment on account. If no CGT is due because the gain is covered by the AEA or losses, you may not need to use the 60-day service. Check GOV.UK guidance for your circumstances.

2026/27 CGT rates

18% on gains within your remaining basic-rate band
24% on gains above the basic-rate band
Annual exempt amount: £3,000
Basic-rate band: taxable income up to £37,700 (gross income up to £50,270, after £12,570 personal allowance)

Common mistakes

Treating all renovation spend as a capital cost - only genuine improvements count
Assuming the mortgage balance reduces the gain - it does not
Missing the 60-day reporting deadline and facing an automatic penalty
Not keeping receipts for buying costs like SDLT - you need these to prove your base cost
Forgetting that capital losses from other disposals can be offset against the gain

Estimate your buy-to-let CGT

Enter your purchase cost, selling costs and income to get a CGT estimate using 2026/27 rates.

Open the CGT calculator

Frequently asked questions

Is CGT on buy-to-let different from CGT on shares?

The rates are the same - 18% and 24% for 2026/27. However, there is a key practical difference: when selling UK residential property with a CGT liability, you must report and pay within 60 days of completion. Share disposals are reported through Self Assessment by 31 January following the tax year.

Does my outstanding mortgage reduce the gain?

No. The CGT gain is the difference between your sale proceeds and your allowable costs (purchase price, buying costs, capital improvements, selling costs). Your mortgage balance is irrelevant to the CGT calculation - it is a debt, not a cost of the asset.

What improvements count as allowable capital costs?

Improvements that genuinely add to the value or extend the nature of the asset: an extension, a loft conversion, a new room, or a significant structural upgrade. Like-for-like repairs and maintenance - replacing a broken boiler with an equivalent model, repainting, fixing gutters - are revenue costs, not capital, and cannot be deducted from the CGT gain.

Do I need to report even if no CGT is due?

If you sell a UK residential property and a CGT liability arises, you must report and pay within 60 days. If the gain is fully covered by the annual exempt amount or capital losses so no tax is due, you generally don't need to use the 60-day service. Separately, if you already file Self Assessment you must report a disposal when your total proceeds for the year exceed £50,000, even where no tax is due.

Can I deduct legal fees from when I bought the property?

Yes. Solicitor fees, stamp duty and survey costs paid when you acquired the property are allowable buying costs. These are added to your base cost and reduce the gain. Keep receipts and records from when you originally bought the property.

This page is for general information only and is not financial, tax or legal advice. Consult a qualified tax adviser or accountant before making decisions about a property disposal.

Sources & references

The rates, allowances and rules in this guide are drawn from the official HMRC and GOV.UK sources below, checked for the 2026/27 tax year. Each link opens the relevant government page in a new tab.

Verified against published HMRC and GOV.UK guidance.