Selling any property can be tricky, but with buy-to-let there are added costs and taxes you’ll want to keep as low as possible.
Here, Telegraph Money explains the steps savvy landlords can take to reduce your tax bill and get the maximum return from your buy-to-let sale.
We will cover:
Before delving into the ways to reduce your tax bill, it’s important to understand the tax landscape when selling a buy-to-let property in the 2026-27 tax year.
Tax rates
The current capital gains tax rates for residential property gains are as follows:
- Higher or additional-rate income taxpayer: 24pc
- Basic-rate income taxpayer: 18pc
You’ll only pay this tax if the property is a second home or buy-to-let and the profit you’ve made exceeds your tax-free capital gains tax allowance; if the property is your main residence, you will likely benefit from Private Residence Relief and will not have to pay capital gains tax on the sale (unless you have rented it out in the past).
Tax-free allowance
The capital gains annual exempt amount is £3,000 for individuals (£1,500 for trusts). This means that any gains you make below the £3,000 threshold in a given tax year are exempt from capital gains tax; you must only pay tax on the gains you make over this amount.
60-day deadline
You need to report and pay any capital gains tax due on a UK residential property sale within 60 days (if the completion date was on or after October 27 2021). The most common way of reporting the sale is online via the government website. You’ll need information about the property sale on hand, such as transaction dates and the property value in order to complete the form.
If you do not report within the 60 days, HMRC may start charging late fees, so be sure to file before the deadline.
This capital gains tax return must be filled out in addition to a self-assessment tax return, due by January 31 each year – even if you’ve already paid the capital gains tax you owe. This is because HMRC needs the full picture of your income in order to apply allowances, losses and expenses, where applicable.
We’ve outlined the following five simple ways to lower your tax bill when selling your property:
- Remember to use all available reliefs
- Move into the property
- Use a company structure
- Make use of your partner’s tax allowance
- Use a more tax-efficient way of investing in property
When selling a buy-to-let, owners are able to offset a number of costs against their capital gains tax bill. These could include estate agent and solicitors’ fees, surveyor’s costs and funds spent on home improvements.
For example, someone who made a £10,000 capital gain and spent £7,000 on a property repairs may not have to pay any tax, as deducting the costs would bring the total gain to less than the 2026-27 tax-free CGT allowance of £3,000.