Guide
Capital Gains Tax on Inherited Property 2026/27
When you inherit a property and later sell it, capital gains tax (CGT) may apply — but the gain is measured from the probate value, not the price the deceased originally paid. This guide explains how CGT works on inherited property, what costs you can deduct and how the 2026/27 rates apply.
Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
When does CGT apply to inherited property?
Inheriting a property itself is not a CGT event. No CGT is due when you receive the asset. The potential CGT liability arises when you dispose of the property — typically when you sell it.
At the date of death, the property is revalued to its open-market value for probate purposes. This probate value becomes your base cost for CGT. You are, in effect, treated as having acquired the property at that value on the date of death.
If the property has risen in value between the date of probate and the date you sell, you have a gain on which CGT may be due.
What is the base cost?
Your base cost is the probate value agreed with HMRC as part of the estate — the open-market value of the property at the date of death. You do not use the price the deceased paid decades ago.
If the property was jointly inherited, each beneficiary has a fractional base cost matching their share of the probate value.
Allowable costs you can deduct
When you sell, you can reduce the gain by deducting allowable costs incurred on the disposal:
- Estate agent fees
- Solicitor/conveyancing fees on the sale
- Surveyor fees directly related to the disposal
- Costs of improvement works carried out after you inherited (not routine maintenance)
You cannot deduct probate fees, mortgage repayments or the costs of running the property while you owned it.
Worked example
Sarah inherits her mother's house. The probate value is agreed at £250,000. Two years later, Sarah sells for £290,000. Her solicitor and estate agent charge a total of £6,000.
Sale proceeds£290,000
Minus probate value (base cost)−£250,000
Minus allowable selling costs−£6,000
Gross gain£34,000
Minus annual exempt amount−£3,000
Taxable gain£31,000
The rate Sarah pays depends on her other income for the tax year:
- If her taxable income is £35,000, she has £2,700 of basic-rate band remaining. The first £2,700 of the gain is taxed at 18% (£486); the remaining £28,300 at 24% (£6,792). Total CGT: £7,278.
- If her taxable income already exceeds £50,270, the full £31,000 is taxed at 24% — CGT of £7,440.
Inheritance tax and CGT are separate
Inheritance tax (IHT) and CGT are two completely different taxes. IHT is paid by the estate on the value of assets at death. CGT is paid by the beneficiary on any gain between the probate value and the eventual sale price. Paying IHT does not reduce your CGT, and vice versa. Both can apply to the same property.
The estate itself may have already paid IHT on the property. As the beneficiary, your CGT clock starts from the probate value — after IHT has been settled.
2026/27 CGT rates for residential property
- 18% on gains that fall within your remaining basic-rate band (taxable income up to £50,270, personal allowance £12,570)
- 24% on gains above the basic-rate band
- Annual exempt amount: £3,000 per individual per tax year
Limitations of this calculator
This calculator gives a simplified estimate. It does not model:
- Private Residence Relief (PRR) — if you moved into the inherited property as your main home before selling, partial or full PRR may apply
- Joint ownership — if multiple beneficiaries own fractional shares, each calculates CGT independently on their share
- Deeds of variation — post-death changes to how the estate is divided can affect the base cost
- Non-resident rules — different rules apply if you are not UK resident
Estimate your CGT now
Enter the probate value as your purchase cost and deduct your selling costs to get a CGT estimate using 2026/27 rates.
Open the CGT calculator
Official sources
Frequently asked questions
Do I pay CGT when I inherit a property?
No. Inheriting property is not a disposal for CGT purposes. You only pay CGT if and when you sell (or otherwise dispose of) the property, and only if the sale price exceeds the probate value after deducting allowable costs and the annual exempt amount.
Is CGT calculated from the original purchase price or the probate value?
CGT on inherited property is calculated from the probate value — the open-market value at the date of death, as agreed for inheritance tax purposes. The price the deceased originally paid is irrelevant to your CGT calculation.
Can I deduct solicitor and estate agent fees?
Yes. Fees directly related to the sale — including solicitor fees, estate agent fees and surveyor costs — are allowable deductions that reduce your gain. Probate fees and costs of running the property are not deductible against CGT.
Is inheritance tax the same as capital gains tax?
No, they are separate taxes. Inheritance tax is charged on the estate at death. Capital gains tax is charged on the beneficiary's gain when they later sell the asset. Both can apply to the same property — paying IHT does not eliminate CGT.
What if multiple people inherit the property?
Each beneficiary calculates CGT on their own share of the gain. For example, if two siblings each inherit 50%, each has a base cost of 50% of the probate value, and each can use their own £3,000 annual exempt amount. They may also be in different income tax bands, so the rates applied can differ between them.
This page is for general information only and is not financial, tax or legal advice. CGT rules are complex and your circumstances may differ. Consult a qualified tax adviser or accountant before making decisions about an inherited property disposal.