When selling an inherited house, you’ll pay Capital Gains Tax at 18% or 24% on any profit above the current £3,000 annual allowance, but only if the property isn’t your main residence – there’s no immediate tax liability when you first inherit the property.
Recent government statistics reveal that only 1 in 20 estates in the UK pay Inheritance Tax, yet Capital Gains Tax on inherited property sales has become increasingly significant since the annual CGT allowance dropped dramatically from £12,300 to just £3,000 in April 2023. This reduction means more families face unexpected tax bills when they sell inherited property, making it essential to understand your liability before proceeding with any sale.
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How Much Tax Do You Pay When Selling An Inherited House?
You don’t pay any immediate tax when inheriting property – no Stamp Duty, Income Tax, or Capital Gains Tax is due at the point of inheritance. HMRC will contact you separately if any Inheritance Tax is owed on the estate, which applies at 40% on values above £325,000 (or £500,000 if the property is left to children or grandchildren).
The tax implications only arise later when you decide what to do with the inherited property, whether that’s selling, renting it out, or keeping it as a second home.
What Capital Gains Tax Rates Apply When You Sell?
Capital Gains Tax rates depend on your total income and the type of property you’re selling. For inherited property sales, you’ll pay 18% if you’re a basic-rate taxpayer or 24% if you’re a higher-rate taxpayer. These rates apply only to the profit you make above your annual CGT allowance of £3,000.
The profit calculation starts from the property’s market value on the date you inherited it, not what the original owner paid for it. This “stepped-up basis” often reduces your potential tax liability significantly.
How Much Capital Gains Tax Will I Actually Pay on My Inherited House Sale?
Your CGT liability depends on several factors working together. The table below shows common scenarios and potential tax bills:
Property Sale Price | Inherited Value | Profit | CGT at 18% | CGT at 24% |
---|---|---|---|---|
£200,000 | £180,000 | £17,000 | £2,520 | £3,360 |
£300,000 | £250,000 | £47,000 | £7,920 | £10,560 |
£400,000 | £350,000 | £47,000 | £7,920 | £10,560 |
Remember that your first £3,000 of gains each tax year are tax-free, so these calculations assume profits above that threshold. Property Saviour regularly helps families understand these tax implications and can provide guaranteed cash offers that give you certainty about your final proceeds, taking the stress out of complex tax calculations during what’s already an emotional time.

When Do You Not Pay Capital Gains Tax on Inherited Property?
Several important exemptions can eliminate or reduce your CGT liability:
The property becomes your main residence before you sell it
You sell to your spouse, civil partner, or transfer ownership to them
You gift the property to a registered charity
The total gain is under £3,000 in the tax year
You live in the property for a period before selling (partial relief may apply)
The main residence exemption is particularly valuable – if you move into the inherited property and make it your primary home, you can eliminate CGT entirely when you eventually sell.
What’s the Difference Between Inheritance Tax & Capital Gains Tax on Property?
These are completely separate taxes that apply at different times. Inheritance Tax is paid by the estate before you receive the property, charged at 40% on values above the threshold. Capital Gains Tax is your personal responsibility when you later sell the property, charged on any increase in value since inheritance.
Many families get confused thinking they’ll pay tax twice on the same property, but that’s not how the system works. The estate handles Inheritance Tax, while you handle Capital Gains Tax only if you make a profit when selling.
How Long Do You Have to Report Capital Gains Tax After Selling Inherited Property?
You must report and pay Capital Gains Tax within 60 days of completing the sale of inherited property. This reporting deadline is much shorter than the annual Self Assessment deadline and catches many people off guard.
The process involves submitting a residential property return online and paying any tax due. Penalties and interest charges apply if you miss this deadline, so it’s essential to factor this timing into your sale planning.

What Happens If the Inherited Property Has Decreased in Value?
If the property is worth less when you sell it than when you inherited it, you’ve made a capital loss rather than a gain. You can use capital losses to offset gains from other asset sales in the same tax year or carry them forward to future years.
This situation has become more common in some areas where property values have declined since peak inheritance periods. Keep detailed records of the inheritance valuation and sale price to support any loss claims.
Do You Pay Different Tax Rates for Different Types of Inherited Property?
The CGT rates remain the same regardless of property type – 18% or 24% depending on your income. However, different rules apply depending on how you use the property:
Main residence – no CGT when you sell
Second home or investment property – full CGT applies
Property you rent out – CGT applies plus potential depreciation recapture
Commercial property – same CGT rates but different allowable expenses
Understanding these distinctions helps you plan the most tax-efficient approach to selling inherited property.
Can You Reduce Capital Gains Tax on Inherited Property Sale?
Several legitimate strategies can reduce your CGT liability. Allowable expenses include estate agent fees, legal costs, improvement costs (but not general maintenance), and marketing expenses. These costs reduce your taxable gain pound-for-pound.
Timing your sale can also matter – if you expect lower income in a future tax year, delaying the sale might move you from the 24% to the 18% CGT rate. However, this strategy only works if property values remain stable or increase.

Why Choose Property Saviour Over Estate Agents for Your Inherited Property?
Selling inherited property through traditional estate agents can drag on for months or even years, particularly when properties need updating or repairs. Estate agents often over-value properties to win your business, then repeatedly reduce prices when buyers struggle to secure mortgages for older or neglected homes. With emotional attachments already making the process difficult, the uncertainty of viewings, repairs, and potential sale fall-throughs adds unnecessary stress during an already challenging time.
Property Saviour offers a completely different approach – we provide guaranteed cash offers within 24 hours and can complete your sale within 10-14 days, or at a timeframe that suits your needs. Unlike traditional sales, you receive 100% of our offer price with no estate agent fees, plus we contribute £1,500 towards your legal costs and provide free house clearance services. This means no costly repairs, no endless viewings, and no risk of buyers pulling out due to mortgage issues. One recent executor shared their experience: after their inherited property sat on the market for over a year with two failed sales, Property Saviour completed their purchase in just 10 days with the promised price.
Whether you’re dealing with a property that’s been neglected for decades, facing family disagreements, or simply need certainty during an emotional time, Property Saviour understands the unique challenges of inherited property sales14. We buy properties in any condition – from houses with sitting tenants to empty homes that have been untouched for years. Get in touch with Property Saviour today for a no-obligation cash offer and discover how we can help you move forward with confidence and speed15.
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