If you’re planning to sell a rental property, it’s crucial to understand what costs are actually tax-deductible.
Many landlords assume that anything they spend during the sale process can be knocked off their Capital Gains Tax bill. But HMRC doesn’t see it that way — and if you get it wrong, the tax bill can be much higher than expected.
Here’s a breakdown of what you can and can’t claim.
Allowable Costs You Can Deduct
These are expenses that directly reduce the gain when working out Capital Gains Tax (CGT):
- Solicitor’s fees – for the legal side of the sale
- Estate agent fees – including marketing
- Stamp Duty Land Tax (SDLT) – from when you originally bought the property
- Capital improvements – e.g. a loft conversion, new kitchen, adding an extension
- Costs of purchase – surveyor’s fees, legal fees, and agent fees from the original purchase
All of these are considered to add value or are part of acquiring or disposing of the property.
Disallowed Costs You Can’t Claim
These are commonly misunderstood and often wrongly claimed:
- Mortgage repayments or interest – not allowed for CGT
- Repairs and maintenance – including redecoration or fixing wear and tear
- Improvements made purely to help sell – e.g. cosmetic updates right before listing
- DIY labour – your own time has no tax value here
Even if you feel these are valid costs, HMRC won’t allow them unless they’re proven capital improvements.
Real Case Example
One of our clients spent over £10,000 doing up a property before selling it. But when we reviewed the receipts, the majority were cosmetic: painting, cleaning, new flooring.
Only about £2,500 counted as capital improvements.
That small detail made a big difference to the final CGT calculation.
Want to understand how Capital Gains Tax works and how much you might owe? Read our full guide to Capital Gains Tax on UK property.
Tips to Stay on the Right Side of HMRC
- Keep detailed receipts and invoices – ideally showing the nature of the work
- Store these for at least 6 years – HMRC can open an enquiry long after the sale
- Get professional help if in doubt – especially if there are mixed-use costs
Prefer to watch? Here’s a quick breakdown of what you can and can’t claim when selling a UK rental property:
Need a Checklist?
We’ve created a simple “Allowable Costs When Selling a Rental Property” checklist you can download for free.
Use it to help gather documents and spot which expenses qualify before you submit anything to HMRC.
Download your free checklist:
Click here to download the Allowable Costs Checklist (PDF)
Selling a Property and Need Help?
We offer fixed-fee Capital Gains Tax reviews to help landlords:
- Understand their CGT position
- Avoid costly mistakes
- Stay compliant with deadlines
If you’re unsure about your expenses, contact us at Grace Certified Accountants today.
Related reading:
• How to Report CGT When You Sell a Rental Property (UK Guide 2025)
• Navigating the Property Market – Your Guide to Buying, Selling and Investing