Capital Gains Tax on inherited property

You don't pay Capital Gains Tax on the value of a house when you inherit it. The tax only applies to any rise in value between the date of death and the sale. In the 2026 to 2027 tax year, if the executors sell the house, gains above a £3,000 allowance are taxed at 24%. If the house passes to a beneficiary who then sells, they pay at their own rate of 18% or 24%. Either way, tax on a UK home must be reported and paid within 60 days of completion.

This is general information for England and Wales, not tax advice. Estates can be complicated, so speak to a solicitor or accountant about yours.

Why there's no tax on the inheritance itself

There's no Capital Gains Tax when someone dies. Instead, everything they owned is treated as passing at its market value on the date of death. That value becomes the starting point (the "base cost") for the executors, and for anyone who later inherits the house.

So if a parent bought their house for £40,000 decades ago and it was worth £250,000 when they died, the £210,000 rise during their lifetime is never charged to Capital Gains Tax. It does count towards the estate for Inheritance Tax, which is a separate tax: see Inheritance Tax on a house.

Why the probate value matters

The value at the date of death is usually called the probate value. HMRC's helpsheet HS282 says that if the value has been "ascertained" (settled) for Inheritance Tax, it must be used as the base cost for Capital Gains Tax. When no Inheritance Tax is due, the value usually hasn't been settled with HMRC, so the base cost is the house's actual market value at the date of death, and HMRC can check the figure you use.

That's why a realistic professional valuation at the date of death is worth having. Too low a figure can mean more Capital Gains Tax later; too high a figure can mean more Inheritance Tax now.

How to work out the gain on an inherited house

1. Start with the sale price.
2. Take off the probate value.
3. Take off the costs of selling, such as the estate agent's and solicitor's fees.
4. Take off the cost of any improvements made since the death, such as an extension. Repairs and decorating don't count.
5. Executors can also deduct a share of the cost of getting probate (HMRC calls it the cost of "establishing title"). They can use the actual cost, or a figure from HMRC's published scale in Statement of Practice SP02/04.

What's left is the gain. The £3,000 annual exempt amount comes off before the tax is worked out.

Who pays: the executors or the beneficiaries?

It depends on who owns the house when it's sold.

	Executors sell during the administration	Beneficiaries sell after it's transferred to them
Who pays the tax	The estate	Each beneficiary, on their share
Rate (2026 to 2027)	24%	18% or 24%, depending on each person's income
Tax-free allowance	£3,000 for the estate, in the tax year of the death and the next two tax years	£3,000 each, if not already used on other gains
Base cost	Probate value	Probate value (they can also deduct costs the executors paid to transfer the house to them)
Who reports within 60 days	The executors	Each beneficiary

Whether the executors sell, or transfer the house to the beneficiaries first, is decided as part of running the estate. It affects more than this tax: it can change who pays the bills, whether a council tax exemption continues, and whether some Inheritance Tax claims are available. Executors often take advice before deciding.

An example

A house had a probate value of £200,000. It sells for £235,000, with £5,000 of selling costs, so the gain is £30,000. Nobody has other gains that year, and the example leaves out probate costs to keep it simple.

Who sells	Taxable gain	Tax for 2026 to 2027
The executors	£30,000 − £3,000 = £27,000	£27,000 at 24% = £6,480
Three beneficiaries with a third each, all with enough basic rate band left	£10,000 − £3,000 = £7,000 each	£7,000 at 18% = £1,260 each (£3,780 in total)
The same three beneficiaries, all higher rate taxpayers	£7,000 each	£7,000 at 24% = £1,680 each (£5,040 in total)

You can run your own figures through our Capital Gains Tax calculator.

Private Residence Relief on an inherited home

Private Residence Relief, which normally makes selling your own home tax-free, can apply to an inherited house in two situations.

• People who lived there before and after the death. If the house was the only or main home of one or more people both immediately before and after the death, and those people are entitled to 75% or more of the sale proceeds, the executors can claim the relief when they sell. This is in section 225A of the Taxation of Chargeable Gains Act 1992. It can apply, for example, where an adult child lived with a parent and inherits most of the house.
• A beneficiary who moves in. If the house is transferred to you and you live in it as your only or main home, relief covers the time you live there, plus the final 9 months you own it. Any time it wasn't your home is taxed in proportion.

Reporting and paying within 60 days

If there's Capital Gains Tax to pay on the sale of a UK home, it must be reported and paid within 60 days of completion.

• Executors report using a Capital Gains Tax on UK property account and give the date of death. They can't pay the estate's tax through their own personal account: HMRC tells them how to pay after the report is made.
• Beneficiaries report their own share in the same way, through their own account. If they're registered for Self Assessment, the sale also goes on their tax return.

GOV.UK says UK residents don't need to report gains online if their total gains are below the tax-free allowance. If you report or pay late, HMRC may charge interest and a penalty. You'll need the probate value, the sale and completion dates and a list of costs, so keep the paperwork together from the start.

If the house sells for less than the probate value

If the sale price, less costs, is below the probate value, there's no gain and no Capital Gains Tax: the estate has a loss instead. The executors may be able to set that loss against other gains the estate makes. HMRC's helpsheet says a beneficiary can't take over the estate's unused losses.

There may also be an Inheritance Tax refund. If land or buildings from the estate are sold for less than their value at death, the person liable for the Inheritance Tax may be able to claim relief using form IHT38. GOV.UK says the sale usually has to be within 3 years of the death, although some sales within 4 years can qualify. If the claim is accepted, the sale price replaces the probate value, and HMRC's manual says the sale price then becomes the base cost for Capital Gains Tax too. The claim isn't possible if no Inheritance Tax was payable on the house.

Selling an inherited house quickly

Selling soon after probate often means the gain is small, because there's been less time for the price to change. But a quick sale doesn't change how the tax works.

Cash house buyers, including us, usually pay below market value. A quick cash sale can therefore mean a smaller gain or a loss for the estate, but it also means less money to share out. For a house in reasonable condition, when the estate can cover the bills while it sells, an estate agent sale usually gets a higher price. A cash sale suits estates that need speed or certainty, or houses that would be hard to sell on the open market. Selling an inherited house compares the routes.

Records to keep

• the probate valuation and the Inheritance Tax forms
• the grant of probate or letters of administration
• invoices for any improvements made after the death
• the sale completion statement and the agent's and solicitor's invoices
• a note of who owned the house when it was sold (the estate, or named beneficiaries and their shares)
• copies of every 60-day return and proof of payment

If the estate also owes Inheritance Tax, or you're still waiting for probate, selling a house in probate explains how the sale fits around the grant.