Selling a Property During Probate: How CGT Works for Executors (2026/27)
How Capital Gains Tax applies when executors sell an inherited property during probate in 2026/27 — the probate value uplift, the executors' annual exemption, and reporting deadlines.
The probate revaluation — a fresh start for CGT
When someone dies owning a property, that property is revalued to its market value at the date of death for both Inheritance Tax and, crucially, future Capital Gains Tax purposes. This means any increase in value that occurred during the deceased's lifetime — potentially built up over decades of ownership — is never subject to Capital Gains Tax at all, because the new base cost for the estate (and eventually any beneficiary) is the date-of-death value, not the original historic purchase price.
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The revaluation only resets the clock — it does not exempt the property from CGT going forward. If the property continues to be held by the estate for some time (while probate is finalised, or while the executors arrange a sale), and its value rises further before the eventual sale, that additional increase is a genuine capital gain, calculated as:
Sale proceeds − probate (date of death) value − allowable costs (selling costs, capital improvements) = taxable gain
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Suppose a property was valued at £400,000 at the date of death (the probate value) in one tax year, and the executors sell it 14 months later for £430,000, having spent £5,000 on estate agent and legal fees relating to the sale.
- Sale proceeds: £430,000
- Less probate value: £400,000
- Less selling costs: £5,000
- Gain: £430,000 − £400,000 − £5,000 = £25,000
If this sale happens within the tax year of death or either of the following two tax years, the personal representatives can use the full annual exempt amount (£3,000 for 2026/27):
- Taxable gain after exemption: £25,000 − £3,000 = £22,000
- Tax at the flat estate rate of 24%: 24% × £22,000 = £5,280
If the same sale happened in the fourth tax year after death (outside the exemption window), the full £25,000 would be taxable, with no annual exemption available, giving a higher tax bill of 24% × £25,000 = £6,000.
Why the estate's exemption window matters for timing
Because personal representatives only get the annual exempt amount for the tax year of death and the two following tax years, executors managing an estate with a property likely to be sold for a gain have an incentive to complete the sale within that window where practical, rather than allowing probate and the sale process to drag on for several years, which would forfeit the annual exemption on any gain that arises.
Should the estate sell, or should beneficiaries inherit and sell themselves?
In some cases, it can be more tax-efficient for the personal representatives to formally transfer ("assent") the property to the beneficiaries first, allowing the beneficiaries to sell it in their own right using their own annual exempt amount and, if they are basic-rate taxpayers, potentially a lower CGT rate than the flat rate that applies to the estate. This decision depends heavily on the specific beneficiaries' circumstances, how many beneficiaries are involved, and practical considerations around managing a jointly-owned inherited property, and is usually best discussed with a probate or tax adviser before deciding how to proceed.
Reporting and paying
Just as for individuals, personal representatives selling UK residential property during estate administration must generally report the gain and pay any CGT due within 60 days of completion, using HMRC's dedicated Capital Gains Tax on UK property reporting service, in addition to any wider Self Assessment or estate tax return obligations that may apply.
Frequently asked questions
Does a property get a new value for tax purposes when someone dies?
Yes. The property is revalued to its market value at the date of death (the 'probate value'), which becomes the new base cost for Capital Gains Tax purposes for the estate and any beneficiary who later inherits and sells it, effectively wiping out any gain that built up during the deceased's lifetime.
So does that mean no CGT is ever due on an inherited property?
Not necessarily. While the historic gain up to the date of death is wiped out by the probate revaluation, any further increase in value between the date of death and the eventual sale date is a genuine capital gain, and is potentially subject to Capital Gains Tax in the normal way if the property is sold by the estate or later by a beneficiary.
Who pays CGT if the property increases in value between death and sale by the executors?
The estate itself is treated as a taxpayer during the administration period and is liable for CGT on any gain arising between the date of death and the date of sale, calculated and paid by the executors from estate funds before the estate is finally distributed to beneficiaries.
Does the estate get its own annual CGT exempt amount?
Yes, but only for a limited period. The personal representatives (executors) are entitled to use the full individual annual exempt amount for the tax year of death and the following two tax years, after which any gains on assets still held by the estate are taxed without an exemption.
What CGT rate applies to a gain made by the estate on a property sale?
Residential property gains made by personal representatives are taxed at a flat rate — broadly matching the higher rate for individuals (24% for 2026/27) — since the estate does not have graduated tax bands in the same way an individual does.
Is it better for the estate to sell the property or for beneficiaries to inherit it and sell it themselves?
It depends on the beneficiaries' own tax positions and the practicalities of managing an inherited property. If beneficiaries have their own unused annual exempt amount and are basic-rate taxpayers, transferring the property to them (an 'assent') before sale, rather than the estate selling it directly, can sometimes reduce the overall CGT paid compared with the estate's flat higher rate and time-limited exemption.
What deadline applies for reporting and paying CGT on a UK residential property sale by an estate?
The same 60-day reporting and payment deadline that applies to individuals also applies to personal representatives selling UK residential property during the administration period, using HMRC's dedicated Capital Gains Tax on UK property reporting service.
Does probate itself take account of any expected future CGT liability?
No, Inheritance Tax at the point of death is based on the date-of-death market value, entirely separate from any Capital Gains Tax that might later arise if the property increases in value before the estate or a beneficiary eventually sells it — the two taxes interact with the same asset but at different points and using different valuations.
Can selling costs and improvement costs reduce the CGT liability on an estate property sale?
Yes. Costs of sale (estate agent fees, legal fees relating to the sale) and the cost of any capital improvements made to the property since the date of death can be deducted from the sale proceeds when calculating the gain, in the same way they would for an individual selling their own property.
What happens if the property is sold for less than its probate value?
This creates an allowable capital loss for the estate rather than a gain, which can potentially be used to offset other gains realised by the estate in the same tax year, or in limited circumstances carried forward, though the specific rules on loss relief for estates should be checked carefully with the personal representatives' tax adviser.
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