Capital Gains Tax on Inherited Property: What is it and How Does it Work?

The loss of a loved one is difficult. Often making things worse is the admin and emotional turmoil involved in inheriting their belongings, sometimes even their property. For many people those inherited homes hold too many memories of their loved one, pushing them towards looking to make a quick sale on the property.

But what taxes are imposed on you with an inherited property? How do you find out? Where do you have to declare such taxes? Here we’re going to look at capital gains tax (CGT) to clear any questions you may have on the matter.

What is capital gains tax?

It is a tax on any profit you make when selling (or disposing of) an asset that’s increased in value. So if the house that you have inherited is the asset and it has increased in value since the death of the original owner to the time of sale then there’s a chance you’ll be taxed.

A chance.

Capital gains tax isn’t employed if the gain in value is less than £11,700 (at time of writing 2018/19 financial year). But if the increase in value exceeds this amount you’ll be expected to pay GGT.

How do you work out your CGT and if you need to pay it?

If you have inherited the property, working out if you exceed the £11,700 limit is straightforward. Find out the property’s value at time of death of the previous owner and then subtract this from its current sale value. You can find out the market value with HM Revenue & Customs here. Then consider the tax rate.

We Buy Any House have also developed a capital gains tax calculator which allows you to work out the CGT on your inherited property making clearing the matter up super simple.

What do I do if I need to pay capital gains tax?

If your asset is above the limit and you do need to pay CGT you’ll have three things to do:

1. Report you capital gains tax to the relevant authorities. In this instance it’s HM Revenue & Customs and you’ll use their online service here. You’ll need to sign up. Or, you can report your CGT through a self-assessment tax return.

2. Upload documents. These documents should show proof of how you worked out your capital gains tax and could be JPGs, PDFs, or a word document.

3. Review. They will then assess your information and then send you a letter informing how much you’ll need to pay and how to do it.

Any capital gains tax needs to be reported by 31st of Jan after the tax year when you made the gain on the property. Any late submissions may receive a penalty. To ensure that all documents and requirements have been met we advise speaking to an accountant or solicitor beforehand.

Are there any CGT allowances or tax reliefs?

As mentioned, any profit of over £11,700 is taxable. But there are other opportunities for tax relief, too. If you are able to prove the following you may be entitled to what is called private residence relief:

· Inherited the house and lived in it while owning it

· Had not let part of the property out

· Had not used part of the property for business

· The grounds are less than 5,000 square metres

· And you did not initially inherit to make a gain

We hope that the above helps clarify Capital Gains Tax and any worries or questions you may have. If you are still unsure whether it’s something you’ll have to pay on your inherited property we recommend contacting HM Revenue & Customs who can help clarify with you.

Shared by: adam.chapman@webuyanyhouse.co.uk

EAN Content

Content shared by this account is either news shared free by third parties or sponsored (paid for) content from third parties. Please be advised that links to third party websites are not endorsed by Estate Agent Networking - Please do your own research before committing to any third party business promoted on our website. As an Amazon Associate, I earn from qualifying purchases.

You May Also Enjoy

Breaking News

UK monthly property transactions for May 2025

Headline statistics from the latest transactions data include: the provisional seasonally adjusted estimate of the number of UK residential transactions in May 2025 is 81,470, 12% lower than May 2024 and 25% higher than April 2025 the provisional non-seasonally adjusted estimate of the number of UK residential transactions in May 2025 is 80,530, 13% lower than May 2024 and…
Read More
Breaking News

Construction Skills Mission Board (CSMB) shows the Government has a plan

The Construction Skills Mission Board (CSMB) held its first board meeting today (26 June 2025), where it set out a roadmap for recruiting 100,000 more construction workers a year by the end of Parliament. Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said: “The Construction Skills Mission Board (CSMB) is a recognition…
Read More
Paint Stripper Tools
Estate Agent Talk

5 Strategies to Optimise Your Warehouse for Real Estate

The term fixer-upper can mean many things, from ‘slap some paint on the walls and it looks brand new’ to ‘will this building collapse if we open the front door?’ Indeed, in the dicey world of commercial property acquisition, each warehouse you buy will probably fall into both camps. Thinking about the viability of warehouses…
Read More
Breaking News

HMOs sell for up to 50% above market average

New research from Excellion Capital, the boutique debt advisory and investment firm, reveals that HMOs sell for as much as 50% above the average house price, further increasing their investment potential after it was revealed that HMOs also create rental yields of up to 12.5%. After previous research from Excellion Capital recently showed that the…
Read More
Breaking News

UK buyers struggle while 50,000 homes sit empty

As the UK housing crisis deepens, new analysis by Open Property Group exposes a worrying surge in so-called “zombie homes”- properties that sit unoccupied and deteriorating while millions struggle to access affordable housing. Key insights: 50,000+ long-term vacant homes in England alone 23,000+ of these have been empty for more than two years Estimated £13.6…
Read More
Breaking News

Breaking Property News 26/06/25

Daily bite-sized proptech and property news in partnership with Proptech-X.   The UK is Europe’s second most distressed market despite headline GDP growth Retail and Consumers Goods has emerged as the most distressed sector in Europe, with distress levels now the highest since the global financial crisis, according to the latest Weil European Distress Index (WEDI). The…
Read More