If you sell a rental property for more than you paid for it, you may need to pay Capital Gains Tax (CGT) on the profit made. This applies to most buy-to-let properties and second homes that are not your main residence.

Capital Gains Tax is charged on the profit, not the full sale price.

You can usually deduct:

• The original purchase price
   
• Legal and estate agent fees
   
• Stamp Duty paid on purchase
   
• Capital improvement costs
   

Routine repairs and maintenance are not deductible against the gain.

If tax is due, you must:

• Report the sale to HMRC
   
• Pay the estimated Capital Gains Tax
   

within 60 days of completion of the sale.

The gain must also be included on your Self Assessment tax return for that year.

Residential property gains are taxed at:

• 18% for gains within the basic rate band
   
• 24% for gains within the higher or additional rate band
   

The rate depends on your total income for the tax year.

Capital Gains Tax can significantly affect the net proceeds from your sale. Reviewing your position before completion helps ensure the gain is calculated correctly and deadlines are met.