12/06/2026
Selling a Property? What You Need to Know About Capital Gains Tax
When you sell a property that you own, this is considered a chargeable event for Capi-tal Gains Tax (CGT). As a result, a capital gain may arise and there may be tax to pay. To determine the correct tax treatment, the following key questions should be considered:
- Did you live in the property for the entire period of ownership?
- Was the property owned solely by you, or jointly (e.g. with a spouse, partner, or other individual)?
- Did you let out part of the property while living in it?
- Did you occupy the property as your main residence for only part of the ownership period?
- Was the property held as a buy-to-let for the entire ownership period?
One key relief to consider is the Private Residential Relief (PRR) that allows an exemption towards the gain attributable to the period when the property was occupied as the main residence. Where a property has been partly let or partly used as a residence, the gain must be apportioned. However, letting relief could significantly reduce the tax. The final 9 months of ownership are usually treated as a period of occupation, provided the property has been your main residence at some point.
Joint ownership resulted in splitting the gain between the owners. By doing so, every taxpayer can apply their individual tax exemptions and tax band towards the capital gain which ultimately can generate a reduced CGT.
HMRC introduced a 60-day reporting requirement from April 2020. This means you must report the disposal to HMRC within 60 days of the completion date and pay any estimated Capital Gains Tax due within the same timeframe. A final calculation is then made through your Self Assessment tax return for the relevant tax year. Penalties and interest may apply for late submission unless there is no tax to pay.
Overall, CGT on residential property is a combination of ownership structure, usage history, individual tax band and the results from other capital transactions which requires to be calculated carefully to avoid any over or under payment of CGT.
If you like to discuss more, please contact us on www.itaxsolutions.co.uk
