{"id":403,"date":"2026-02-08T06:40:15","date_gmt":"2026-02-08T06:40:15","guid":{"rendered":"https:\/\/www.yopa.co.uk\/homeowners-hub\/?p=403"},"modified":"2026-02-10T21:13:27","modified_gmt":"2026-02-10T21:13:27","slug":"selling-inherited-property","status":"publish","type":"post","link":"https:\/\/dy36.stage.yopa-dev.co.uk\/homeowners-hub\/selling-inherited-property\/","title":{"rendered":"Selling an Inherited Property and Capital Gains Tax"},"content":{"rendered":"\n

Capital gains tax is charged on the profit\nyou make when selling an asset that has increased in value, such as a property.\nMany homeowners never pay capital gains tax on their main residence thought, thanks\nto private residence\nrelief<\/a>. However, capital gains tax can apply when you sell a property\nyou\u2019ve inherited.<\/p>\n\n\n\n

Inheritance tax vs capital gains tax<\/strong><\/h3>\n\n\n\n

If tax has already been paid on the\ninherited home, it was likely inheritance tax \u2013 not capital gains tax. This tax\napplies for estates above the \u00a3325,000 threshold and is paid when the property\nis first inherited. <\/p>\n\n\n\n

You can find more information about\ninheritance tax, when it is applicable and any exemptions here: https:\/\/www.gov.uk\/inheritance-tax<\/a>\n<\/p>\n\n\n\n

Capital gains tax only becomes relevant\nwhen you sell<\/em> the inherited property. You pay tax on any increase in\nvalue from the date you inherited it to the date you sell, minus allowable deductions.<\/p>\n\n\n\n

For example:<\/em>\nif you have a house that was valued at \u00a3200,000 when you inherited it, and you\nsell it for \u00a3200,000 a few months later, you have made a loss once estate agent<\/a>\nand solicitor<\/a>\nfees have been factored in \u2013 and therefore you won\u2019t need to pay capital gains\ntax. However, if you sold the \u00a3200,000 property two years later for \u00a3300,000,\nyou would have to pay capital gains tax on your net profit, which could be a\nconsiderable fee.<\/p>\n\n\n\n

However, there are some deductions that\nreduce the amount of capital gains tax you pay\u2026<\/p>\n\n\n\n

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Deduction for capital gains tax <\/strong><\/h3>\n\n\n\n

You can reduce your capital gains tax bill\nby deducting:<\/p>\n\n\n\n

1. The costs of acquiring the inherited\nproperty<\/strong><\/p>\n\n\n\n

This includes fees for solicitors and surveyors<\/a>.\nMake sure you keep a record of these payments.<\/p>\n\n\n\n

2. Capital improvements<\/strong><\/p>\n\n\n\n

Only significant upgrades that add\nvalue<\/a> – like a new\nkitchen<\/a>, major renovations, or installing central heating are deductible. Routine\nmaintenance or like-for-like replacements do not qualify.<\/p>\n\n\n\n

3. Selling costs<\/strong><\/p>\n\n\n\n

Estate agent fees, solicitor fees,\nand surveyor fees can all be deducted.<\/p>\n\n\n\n

4. Your annual capital gains tax<\/strong> allowance<\/strong><\/p>\n\n\n\n

Everyone has an annual tax-free allowance\nthat is free from capital gains tax. This means that you only pay tax on any\ncapital gains over this amount. For the current 2025\u20132026 tax year the\nindividual tax-free allowance is \u00a33,000<\/a> (\u00a31,500 for\nTrusts). Couples who live together can combine their annual tax-free allowance.<\/p>\n\n\n\n

How capital gains tax is calculated<\/strong><\/h3>\n\n\n\n

Using the hypothetical property mentioned\nabove, which sold for \u00a3300,000, here\u2019s how you would calculate the amount of capital\ngains tax owed:<\/p>\n\n\n\n