Capital Gains Tax on Property: Do I Pay When Selling?
Selling Your Main Home: The Good News
If you are selling your main, primary residence (the house you live in), you usually do not have to pay any Capital Gains Tax (CGT). This is due to a tax exemption called Private Residence Relief (PRR).
You automatically get full PRR if:
- You have lived in the home as your only main residence for the entire time you owned it.
- You have not let part of it out (having a lodger is fine).
- You haven't used part of it exclusively for business (e.g., a converted workshop).
- The grounds are smaller than 5,000 square metres (about 1.2 acres).
Thanks to Private Residence Relief, the vast majority of homeowners pay £0 in Capital Gains Tax when selling their primary house.
You will likely have to pay CGT if you are selling a second home, a buy-to-let investment property, or inherited property that you do not live in. The tax is calculated on the *profit* you made (the sale price minus the original purchase price and costs), not the total sale value.
If you are liable for CGT on a property sale, you must report and pay it to HMRC within 60 days of completion. Do not wait for your annual self-assessment tax return.