When you sell a property inherited from a parent, Capital Gains Tax is only due on the increase in value since the date of death. Your base cost is the probate value, not what your parent paid, so a sale soon after the death often produces little or no tax. Any taxable gain above your £3,000 annual exempt amount is charged at 18% or 24% and must be reported within 60 days of completion.
Selling a parent’s home is often an emotional decision as well as a financial one, and the CGT position depends on who sells, when, and whether you ever lived there. For the official rules, see GOV.UK’s guidance on tax on inherited property.
This guide explains how CGT works on a parent’s property, the difference between the estate selling and you selling, a worked example for 2026/27, and how to keep the bill down.
Do You Pay CGT on a Property Inherited from a Parent?
Not when you inherit it. Receiving a property inherited from a parent is not taxed. Passing a home to children on death is not a disposal for Capital Gains Tax. Any tax due at that point is Inheritance Tax, which is paid by the estate.
For IHT, a parent’s home passing to children or grandchildren can benefit from the residence nil-rate band of up to £175,000 on top of the standard £325,000 nil-rate band. That means many family homes pass with no Inheritance Tax at all. HMRC’s Inheritance Tax guidance explains the thresholds.
CGT only applies later, if you sell or give the property away for more than it was worth at the date of death. Our main guide to capital gains tax on inherited property in the UK covers the wider rules.
How the Gain Is Calculated
- Start with the sale price. Use the agreed completion price, or market value if you give it away.
- Deduct the probate value. This is the market value at the date of your parent’s death. See what probate value is and why it matters.
- Deduct allowable costs. Estate agent and solicitor fees on the sale, and the cost of improvements you made after inheriting, such as an extension or new kitchen fitted as an improvement.
- Apply reliefs. If you lived there as your main home, Private Residence Relief can cover part or all of the gain.
- Deduct your annual exempt amount of £3,000 and tax the rest at 18% within your unused basic rate band and 24% above it.
Because the base cost of a property inherited from a parent resets at death, decades of growth during your parent’s lifetime are never taxed as a capital gain. Our step-by-step guide to how capital gains are calculated on inherited property goes through each line.
Who Sells a Property Inherited from a Parent: the Estate or You?
| Executors sell during probate | You sell after it passes to you | |
|---|---|---|
| Who pays the CGT | The estate | You (and each co-owner) |
| Rate on residential property | 24% flat | 18% within basic rate band, 24% above |
| Annual exempt amount | £3,000 for the estate, in the tax year of death and the next two | £3,000 per owner each tax year |
| Private Residence Relief | Only if a beneficiary entitled to most of the proceeds lived there | For the months it is your main home |
| IHT loss relief if sold below probate value | Available within 4 years of death | Not available |
If several children share a property inherited from a parent, transferring the property to them before sale means each has their own annual exempt amount and rate bands, which often lowers the total bill. Our guide to CGT on inherited property with multiple beneficiaries explains how siblings are taxed on their shares.
Worked Example: Selling Dad’s House
James inherited his father’s house, valued at £250,000 for probate. Eighteen months later, in the 2026/27 tax year, he sold it for £280,000 and paid £5,000 in agent and legal fees. James has £10,000 of his basic rate band unused.
| Step | Amount |
|---|---|
| Sale price | £280,000 |
| Less probate value | (£250,000) |
| Less selling costs | (£5,000) |
| Gain | £25,000 |
| Less annual exempt amount | (£3,000) |
| Taxable gain | £22,000 |
| £10,000 at 18% | £1,800 |
| £12,000 at 24% | £2,880 |
| Total CGT | £4,680 |
If the executors had sold for the same price within the estate, the taxable gain of £22,000 would have been taxed at a flat 24%, giving CGT of £5,280. In James’s case, selling in his own name saved £600. The current bands are set out in our guide to CGT rates for 2026.
If You Lived with Your Parent
If you lived in your parent’s home as your only or main residence and carried on living there after the death, Private Residence Relief can make the gain fully tax-free when you sell. If you moved in later, or moved out before selling, the gain is split by time and only the months it was not your home are taxable, with the final nine months always exempt.
Our guide to selling an inherited property you have lived in shows the time-apportionment calculation. HMRC’s HS283 helpsheet sets out the official method.
Reporting and Paying the Tax
If there is CGT to pay, you must file a UK property return and pay the estimated tax within 60 days of completion. You can report and pay Capital Gains Tax on GOV.UK. If you complete a Self Assessment return, include the gain there too, by 31 January after the tax year ends.
For any property inherited from a parent, keep the probate valuation, completion statements and receipts for any improvements for at least four years after the end of the tax year of sale, as HMRC may ask to see them.
Not sure who to ask? Our guide to choosing a capital gains tax specialist explains what to look for and how we help clients online across the UK.
Frequently Asked Questions
Do I have to pay capital gains tax on my parents’ house after they die?
Not when you inherit it. You only pay CGT if you sell or give it away for more than its value at the date of death. If you sell soon after for about the probate value, there is usually no tax to pay.
How much tax do you pay when you sell an inherited house?
You pay 18% or 24% on the gain above the probate value, after costs and your £3,000 annual exempt amount. The rate depends on your other income. If the estate sells, the rate is a flat 24%.
Is it better to sell a parent’s house before or after probate?
The house cannot usually be sold until probate is granted. After that, it can be sold by the executors or transferred to the beneficiaries first. Selling as beneficiaries often gives more annual exempt amounts and access to the 18% rate.
Can I avoid capital gains tax on my parents’ house?
You can reduce or remove it legitimately by selling soon after the death, moving in and making it your main home, claiming all allowable costs, and using each beneficiary’s annual exempt amount.
Do I need to tell HMRC if I sell an inherited house with no gain?
No 60-day return is needed if there is no CGT to pay. If you complete a Self Assessment return, you may still need to report the disposal if the total sale proceeds for the year are more than £50,000.
Does the probate value become my base cost for CGT?
Yes. The value agreed for Inheritance Tax at the date of death becomes your acquisition cost. That is why an accurate, professional probate valuation matters.
Conclusion
Selling a property inherited from a parent is often taxed far less than people expect, because CGT only applies to the growth since the date of death. The main decisions are who sells, when, and whether anyone lived there as their main home.
Get a realistic probate valuation, compare an estate sale with a sale by the beneficiaries, and remember the 60-day deadline if there is tax to pay.
For tailored advice on your parent’s property, speak to our inheritance and CGT specialists. Call us on +44 (0)1204 859315 or send us your question for a free initial consultation and a fixed-fee quote within 24 hours.
