Selling an Inherited Property: How Capital Gains Tax Works (2026/27)
How Capital Gains Tax applies when you sell a property you've inherited in 2026/27, including how the probate value sets your acquisition cost, the 60-day reporting deadline, and shared inheritance between siblings.
Your Acquisition Cost Is the Probate Value
A common misunderstanding is assuming that selling an inherited property means paying Capital Gains Tax on the full sale price, or on the gain since the original owner bought the property many years ago. Neither is right: for CGT purposes, you're treated as having acquired the property at its market value on the date of death — the same value used (or that should have been used) for Inheritance Tax purposes during probate. Any CGT liability is based purely on the gain between that probate value and your eventual sale price.
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Because your acquisition cost resets to the date-of-death value, a straightforward, prompt sale close to the probate valuation often produces little or no taxable gain at all. Gains more commonly arise where probate takes a long time to complete — sometimes a year or more for a complex estate — during which the property market moves upward, or where the property is deliberately held for a period before sale (for example, while it's rented out, or while beneficiaries decide what to do with it) and appreciates in value over that time.
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Where a property passes to multiple beneficiaries — commonly siblings inheriting a parent's home in equal shares — each is treated as owning and disposing of their own individual share for CGT purposes, based on their share of the probate value. This means each sibling separately calculates their own gain, applies their own £3,000 annual exempt amount, and is liable for CGT at their own applicable rate based on their overall income for the year, rather than the gain being calculated once and simply divided.
The 60-Day Reporting Deadline
Gains on UK residential property, including an inherited property once you've sold it, generally need to be reported to HMRC and any tax paid within 60 days of completion, using HMRC's dedicated online property disposal service — a materially tighter deadline than the usual Self Assessment filing timetable. This applies on top of, not instead of, including the gain on your Self Assessment return for the year, so missing the 60-day window can trigger penalties even if you file your annual return correctly and on time.
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- Confirm the probate value used for the property at the date of death
- Work out the gain (if any) between the probate value and your eventual sale price
- Apply your individual £3,000 annual exempt amount if the property is jointly inherited
- Report and pay any CGT due within 60 days of completion, separately from your Self Assessment return
This article is general information, not financial or tax advice. Figures use 2026/27 UK Capital Gains Tax rates and allowances.
Frequently asked questions
What acquisition cost is used for Capital Gains Tax when I sell an inherited property?
The property's value at the date of death (its probate value, as declared for Inheritance Tax purposes) becomes your acquisition cost for Capital Gains Tax — any gain is measured from that probate value to the eventual sale price, not from what the original owner originally paid for the property decades earlier.
Do I pay Capital Gains Tax if I sell an inherited property for roughly the same as its probate value?
Generally no, or very little — if the sale price is close to the probate value, there's little or no gain to tax. A CGT liability typically arises when the property has increased in value between the date of death and the date of sale, which can easily happen if probate takes many months or the market moves.
Does the CGT annual exempt amount apply to an inherited property sale?
Yes — the annual exempt amount (£3,000 in 2026/27) is deducted from any gain before CGT is calculated, the same as with any other chargeable asset disposal, though this modest allowance is easily used up on a property with even a moderate gain.
How is an inherited property split between siblings treated for CGT if it's later sold?
Each beneficiary is treated as owning their own share of the property from the date of death, at their share of the probate value, and each is separately liable for CGT on their own share of any gain when the property is eventually sold — the annual exempt amount applies individually to each sibling's share of the gain.
Is there a deadline for reporting and paying CGT after selling an inherited property?
Yes — UK residential property gains generally need to be reported and any tax paid within 60 days of completion, using HMRC's dedicated property disposal reporting service, separately from (and in addition to) reporting the gain on your Self Assessment return.
Try the calculators
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Capital Gains Tax on Property Calculator
Calculate the Capital Gains Tax on a UK property sale, including Principal Private Residence relief.
Inheritance Tax Calculator
Estimate Inheritance Tax liability on an estate with our UK IHT calculator.
Related reading
Inheriting a Property: How CGT and IHT Interact (They're Not the Same Tax)
Inheritance Tax and Capital Gains Tax on an inherited property are two separate taxes charged on two different events. Here's exactly where each one applies, why paying one doesn't excuse the other, and how the probate value links them.
Cohabiting Couples and Property Tax in the UK 2026/27
Tax and legal risks for unmarried couples who own property together: CGT on transfers, Stamp Duty on buy-outs, Inheritance Tax exposure and why a will and deed of trust matter.
Capital Gains Tax When You Sell an Inherited Property: How the Gain Is Actually Calculated
CGT on an inherited property is calculated from the probate value, not what the deceased originally paid. How the base cost, allowances and 60-day reporting rule work.