Not right away. In the UK, you don’t pay Capital Gains Tax (CGT) when you inherit a property — but your tax bill starts building the moment you decide to sell it.
Here’s what you need to know.
🎥 Want to watch instead? Here’s my full video where I explain whether you need to pay Capital Gains Tax on inherited property and how the rules work in practice:
No CGT on Death
When someone dies and leaves you a property:
- There’s no Capital Gains Tax at the time of death
- Instead, the property gets a new base value — called the probate value
This becomes your starting point for CGT if you sell later.
We’ve explained CGT in detail in this guide — from rates to allowances and reporting rules.
What Is the Probate Value?
The probate value is the property’s market value on the date of death.
Let’s say:
- Your parent bought the home for £80,000
- It’s worth £300,000 when they die
- You inherit it, and sell it later for £325,000
Your gain is £25,000, not £245,000.
You’re only taxed on the increase since you inherited it.
When You Do Pay CGT
You only pay CGT if and when you sell the inherited property.
You get a £3,000 annual allowance, and then:
- Basic rate taxpayers pay 18%
- Higher rate taxpayers pay 24% (2025/26 rates)
If you never sell it — for example, you move in or rent it out — CGT doesn’t apply until a sale.
What If You Sell Quickly?
Even if you sell the property right after inheriting it, CGT can still apply — but your gain might be small.
Example:
- Inherited at £300,000
- Sold two months later for £310,000
- Gain = £10,000 – £3,000 allowance = £7,000 taxable
That’s still reportable to HMRC.
Gifting a property instead? The rules are very different. Read our gifting guide to compare.
Reporting Requirements
If you sell an inherited property and CGT is due:
- You must report the sale to HMRC within 60 days
- That’s separate from Self Assessment
Late reports can lead to penalties and interest, even if you didn’t realise tax was due.
Final Thoughts
You don’t pay CGT when you inherit a property — but the tax meter starts running the moment you plan to sell.
If you’re unsure of the probate value or how to report a gain, get advice before you list the property.
📞 Book a clarity call and we’ll help you calculate your gain properly and stay compliant with HMRC.
🎥 Want more clarity? Watch my full video on CGT for inherited property — I break down the rules step by step.
In some cases, people consider using a trust instead. Here’s what you should know