Capital Gains Tax on Inherited Property (2026/27)
Last updated 23 June 2026 · 10 min read · By the LandlordTaxAi Editorial Team
The short answer
You pay no CGT when you inherit — only when you sell. Your gain is the sale price minus the probate (date-of-death) value, minus selling costs and improvements. Tax the result at 18% within your basic-rate band and 24% above it, after the £3,000 allowance. Report and pay within 60 days of completion.
Losing someone is hard enough without a confusing tax bill. The good news is that Capital Gains Tax on inherited property is usually much smaller than people fear, because you do not use the price the deceased originally paid — you use the value at the date of death. This guide explains the rule, the difference between selling as a beneficiary versus through the estate, and shows the full sums. For a quick figure, use our free CGT calculator with the probate value as your purchase price.
Two different taxes — don’t confuse them
Inheriting property can involve two taxes, but never at the same moment:
| Tax | When | Who pays |
|---|---|---|
| Inheritance Tax | On the estate, before you receive the property | The estate |
| Capital Gains Tax | Only if you later sell for more than the probate value | You (or the estate) |
The act of inheriting is never a CGT event. CGT only enters the picture on a later sale, and even then it only bites on the increase in value since the death.
The probate value is your base cost
When someone dies, their assets are “rebased” to market value at the date of death. For property, this is the figure used for probate. That probate value becomes your acquisition cost for CGT. This is why getting an accurate, properly evidenced valuation at the time of death matters: a higher probate value means a lower future gain (though it can mean more Inheritance Tax, so the two have to be balanced).
Practical tip: if you sell soon after death at close to the probate value, there is often little or no gain at all. Where the property sells for less than the probate value within a few years, the estate may be able to reclaim Inheritance Tax instead.
Free calculator · no sign-up
Capital Gains Tax calculator
Estimate the CGT on your property sale for 2026/27
Result
- Total gain
- £66,000
- Less annual exempt amount
- − £3,000
- Taxable gain
- £63,000
- CGT at 24%
- £15,120
- Net proceeds after CGT
- £50,880
Estimate based on verified 2026/27 UK rates. Informational only — not personal tax advice.
Work out the gain in seconds
Enter the probate value as your “purchase price” and the sale price — the calculator does the rest.
Open the free CGT calculatorA full worked example
Daniel inherits his late mother’s house. It was valued at £280,000 for probate. Eighteen months later he sells it for £312,000. He is a higher-rate taxpayer and never lived in it.
| Sale price | £312,000 |
| Less: probate value (base cost) | − £280,000 |
| Less: selling costs (agent + legal) | − £5,500 |
| Gain | £26,500 |
| Less: annual exempt amount | − £3,000 |
| Taxable gain | £23,500 |
| CGT at 24% | £5,640 |
Notice the gain is only £26,500 — the rise in value since death — not the whole £312,000. If Daniel had instead used his mother’s original 1990s purchase price, he would have wrongly calculated a gain many times larger and massively overpaid.
Selling through the estate vs as a beneficiary
If the executors sell the property during the administration of the estate, the estate pays the CGT. The estate has the full £3,000 annual exempt amount for the tax year of death and the two following years, and pays at the 24% residential rate. If instead the property is transferred to you first, you sell it using your own £3,000 allowance and your own 18%/24% rates — which can be better if you are a basic-rate taxpayer or if several beneficiaries each have an allowance to use.
Frequently asked questions
Do I pay Capital Gains Tax when I inherit a property?
No. There is no Capital Gains Tax when you inherit a property. Inheritance Tax may be due from the estate, but that is a separate tax paid before the property passes to you. Capital Gains Tax only becomes relevant if and when you later sell the property for more than its value at the date of death.
What is the base cost of an inherited property for CGT?
It is the market value at the date of death — usually the figure agreed for probate. This is known as the 'probate value' and it becomes your acquisition cost. So your gain is the sale price minus the probate value, minus selling costs and any capital improvements you make. The original price the deceased paid is irrelevant, which often means a much smaller gain than people expect.
How much CGT will I pay on an inherited house?
On a residential property you pay 18% on any gain within your remaining basic-rate band and 24% above it, after the £3,000 annual exempt amount for 2026/27. Because your base cost is the date-of-death value, the taxable gain is only the increase in value since you inherited — for example, if probate value was £280,000 and you sell for £300,000, the gain before costs is £20,000, not the whole sale price.
What if the property is sold during the administration of the estate?
If the personal representatives (executors) sell the property before transferring it to beneficiaries, the estate pays the CGT. The estate gets the full £3,000 annual exempt amount for the tax year of death and the two following tax years, and pays at the residential rate of 24%. If instead the property is transferred to you and you sell it, you use your own allowance and your own 18%/24% rates.
Do I have to report the sale within 60 days?
Yes. If you sell an inherited UK residential property at a gain with tax to pay, you (or the estate's representatives) must report and pay the Capital Gains Tax through HMRC's UK Property Account within 60 days of completion. This is separate from Self Assessment and applies even where the taxable gain is small.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 23 June 2026 · Based on HMRC guidance on Capital Gains Tax, the date-of-death rebasing rule and the taxation of estates in administration. Figures are for the 2026/27 tax year. This article is informational only and does not constitute tax advice. Always check the latest details on GOV.UK or with a qualified accountant.