When an inherited property with multiple beneficiaries is sold, Capital Gains Tax depends on who sells it. If the executors sell during the administration of the estate, the estate pays CGT at 24% with one £3,000 allowance. If the property is first transferred to the beneficiaries and they sell, each is taxed only on their own share, with their own £3,000 allowance and their own 18% or 24% rate.
In both cases the gain is measured from the probate value, not from what the person who died originally paid. Choosing the right route before the sale can cut the family’s total tax bill by thousands of pounds. For the basic rules, see GOV.UK’s guidance on tax on property you inherit.
This guide explains how CGT works when siblings or other beneficiaries inherit a property together, compares an executor sale with a beneficiary sale using a full 2026/27 worked example, and covers what happens if one of you wants to keep the house.
How CGT Works on an Inherited Property With Multiple Beneficiaries
No CGT is due when someone dies. The estate, and later the beneficiaries, are treated as acquiring the property at its market value on the date of death. Our guide to probate value and why it matters for CGT explains how that figure is set.
For an inherited property with multiple beneficiaries, CGT only applies to growth in value after the death, and it is charged on whoever makes the sale:
- The personal representatives (executors or administrators) if they sell the property while the estate is still being administered.
- The beneficiaries if the executors first transfer (“appropriate”) the property to them and they then sell it themselves.
HMRC’s Capital Gains Manual on the period of administration sets out how personal representatives are treated.
Executor Sale vs Beneficiary Sale
| Executors sell | Beneficiaries sell after transfer | |
|---|---|---|
| Who pays the CGT | The estate, before the money is shared out | Each beneficiary, on their own share |
| Annual exempt amount | One £3,000 for the estate (year of death and the next two tax years) | £3,000 each, if not used elsewhere |
| Rate on residential property | 24% on the whole taxable gain | 18% within each person’s unused basic rate band, 24% above |
| Base cost | Probate value | Each person’s share of the probate value |
| Extra costs | Can deduct a share of probate and valuation costs | Selling costs on their share |
| Losses | Stay in the estate and cannot pass to beneficiaries | Each beneficiary can use their loss against their own gains |
| 60-day return | Filed by the executors | Each beneficiary files their own |
For an inherited property with multiple beneficiaries, the beneficiary route usually wins, especially basic rate taxpayers. The executor route can be simpler when the gain is small enough to fall within the estate’s £3,000 allowance, or when the estate needs the cash to pay debts or Inheritance Tax.
Worked Example: Three Siblings Inherit a House
James, Priya and Tom inherit their father’s house in equal shares. It was valued at £300,000 for probate. It is sold in 2026/27 for £345,000, with £6,000 of agent and legal fees, giving a gain of £39,000. James and Priya are basic rate taxpayers with at least £10,000 of their basic rate band unused. Tom is a higher rate taxpayer.
| Route | Calculation | CGT payable |
|---|---|---|
| Executors sell | (£39,000 − £3,000) × 24% | £8,640 |
| James sells his third | (£13,000 − £3,000) × 18% | £1,800 |
| Priya sells her third | (£13,000 − £3,000) × 18% | £1,800 |
| Tom sells his third | (£13,000 − £3,000) × 24% | £2,400 |
| Beneficiaries’ total | £6,000 |
Transferring the house to the siblings before the sale saves the family £2,640. The saving grows with the size of the gain and the number of basic rate beneficiaries. The executors could reduce their figure slightly by deducting allowable probate costs, but rarely by enough to close the gap. Try your own numbers in our free CGT calculator, and see our guide on how to avoid capital gains tax on a deceased estate for more planning points.
When One Beneficiary Wants to Keep the Property
With an inherited property with multiple beneficiaries, it is common for one sibling to want the house while the others want cash. There are two usual ways to handle this:
- The executors give that beneficiary the house as their share, with the others receiving other assets or cash from the estate. No CGT arises if this happens as part of the administration and no one sells.
- The beneficiary buys out the others after the property has been transferred to all of them. Each sibling who sells their share makes a disposal, with a gain measured from their share of the probate value.
After a transfer, the beneficiaries normally hold the property as tenants in common, each owning a fixed share. Our page on capital gains tax on jointly owned property explains how gains are split when co-owners sell.
If a Beneficiary Lives in the Property
Private Residence Relief is personal, even on an inherited property with multiple beneficiaries. A beneficiary who moves in and makes the house their only or main home can claim relief on their own share for the months they lived there, plus the final nine months. The other beneficiaries cannot. Our guide to selling an inherited property you have lived in covers how that apportionment works.
Executors can also claim Private Residence Relief on a sale in limited cases: where the property was the main home of beneficiaries entitled to at least 75% of the sale proceeds, both before and after the death.
If the Property Sells for Less Than Probate Value
When an inherited property with multiple beneficiaries sells below probate value, the sale creates a capital loss. If the executors sell, that loss stays in the estate and cannot be passed to the beneficiaries. If the beneficiaries sell after a transfer, each can use their share of the loss against other gains.
Where the executors sell land or buildings within four years of the death for less than probate value, they may also be able to claim back some Inheritance Tax using form IHT38.
Reporting and Paying Within 60 Days
Whoever sells must report a taxable gain on UK residential property and pay the estimated CGT within 60 days of completion. Executors file one return for the estate. When an inherited property with multiple beneficiaries is transferred first, the paperwork is split. When beneficiaries sell, each files their own return for their share. You can report and pay Capital Gains Tax on GOV.UK, and our guide shows how to report UK property CGT in 60 days.
If each beneficiary’s gain is below their £3,000 annual exempt amount and no tax is due, no 60-day return is needed.
Frequently Asked Questions
Do I have to pay capital gains if I sell an inherited property?
Only if it sells for more than its probate value after allowable costs. If several of you inherit, each beneficiary who sells is taxed only on their share of the gain, after their own £3,000 allowance.
How is capital gains tax split between beneficiaries?
If the property is transferred to the beneficiaries before the sale, each pays CGT on their own share of the gain at their own rate. If the executors sell, the estate pays the tax and the beneficiaries receive the net proceeds.
How are capital gains calculated on an inherited property?
Take the sale price, deduct the probate value and allowable selling and improvement costs, then deduct the annual exempt amount. The rest is taxed at 18% or 24% for individuals, or 24% for executors.
Do executors pay capital gains tax on property?
Yes, if they sell the property for more than its probate value during the administration of the estate. They pay at 24% on residential property after the estate’s £3,000 allowance, and must file a 60-day return.
Is it better for executors or beneficiaries to sell an inherited house?
It is usually cheaper for beneficiaries to sell after a transfer, because each gets their own allowance and may pay 18% instead of 24%. The executor route can suit small gains or estates that need the cash.
What happens if one sibling wants to keep the inherited house?
The executors can give that sibling the house as their share of the estate, or the sibling can buy out the others’ shares. A buyout is a sale by each sibling, so CGT may be due on any rise in value since the death.
Conclusion
With an inherited property with multiple beneficiaries, the biggest CGT decision is who sells it. Transferring the property to the beneficiaries first often gives each person their own £3,000 allowance and their own tax rate, which can save thousands compared with an executor sale.
Get a probate valuation you can rely on, agree the plan between the executors and beneficiaries before marketing the property, and diarise the 60-day reporting deadline.
For advice on your family’s situation, talk 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.
