CGT on Inherited Property — Probate Values, PRR & What You Owe

Does Inheriting a Property Trigger CGT?

No. Inheriting a property — whether through a will or intestacy — is not in itself a disposal for CGT purposes. There is no CGT at the point of inheritance. Instead, any CGT liability arises only when the inherited property is later sold, gifted, or otherwise disposed of.

The tax charge at the point of death is Inheritance Tax (IHT), not CGT. These are entirely separate taxes, and it is possible (though painful) to face both IHT on the estate and CGT on a later sale of an inherited asset.

The Probate Value Becomes Your Base Cost

For CGT purposes, when you inherit a property, your **base cost is the market value of the property at the date of death** — not what the deceased originally paid for it. This is known as "probate value" or "date of death value", and it is the figure agreed with HMRC for IHT purposes (or determined by a RICS-qualified surveyor).

This "uplift" to market value at death is highly beneficial. If the deceased paid £80,000 for a property now worth £350,000, the £270,000 gain accrued during their lifetime effectively escapes CGT entirely. Your base cost is £350,000, so CGT is only charged on any further growth from that point.

**Example:** You inherit a property in March 2024 at a probate value of £350,000. You sell it in 2026 for £380,000. Your gain is £380,000 − £350,000 = £30,000, less allowable costs and the annual exempt amount of £3,000, leaving a chargeable gain of approximately £27,000.

When Can Private Residence Relief Apply to an Inherited Property?

PRR can apply to an inherited property if you **actually lived in it as your main home** at some point after inheriting it. Merely inheriting it does not count as occupation; you must genuinely take up residence.

If you move in, live there as your main home, and then sell, you will receive PRR for the periods of genuine occupation plus the final nine months. Any period before you moved in (between inheritance and occupation) would not qualify.

Importantly, the "period of ownership" for PRR purposes runs from the date of inheritance — not from when the deceased purchased the property. The uplift in base cost and the fresh start for PRR purposes work together to produce a much better CGT position than if you had owned the property from its original purchase date.

What If You Already Own a Main Home?

If you already own and live in another property as your main home, and you inherit a second property, the inherited property cannot simultaneously be your main home. PRR will not apply unless you either move into the inherited property or make a valid main residence nomination election within two years of acquiring a second home.

In practice, many people inherit a property, leave it empty or let it out while dealing with the estate and deciding what to do, and then sell it. In that scenario, no PRR will be available (other than the final nine months, if you lived there at any point during ownership).

Allowable Deductions When You Sell

When calculating your gain on an inherited property, you can deduct from the sale proceeds:

• The agreed probate value (your base cost)
• Legal and estate agent costs of the sale
• Any capital improvement expenditure you incurred (e.g. a new extension or full renovation) — not routine maintenance
• Legal and professional costs incurred in establishing the probate value, if not already deducted for IHT

You cannot deduct the costs of clearing, cleaning, or generally tidying the property unless these are capital in nature.

The 60-Day Reporting Rule

If the inherited property is a UK residential property and a chargeable gain arises on sale, you must report and pay the CGT to HMRC within **60 days of completion**. This applies even if you are completing a Self Assessment return. See our dedicated guide on the [60-day reporting rule](/cgt-60-day-reporting-rule-property-sale) for full details.

Multiple Beneficiaries

Where a property is inherited by several people jointly, each beneficiary is treated as owning their share. Each can use their own annual exempt amount (£3,000 in 2026/27) and their own applicable CGT rate. This can significantly reduce the combined tax charge compared to a sole beneficiary.

Use Our Calculator

Our [Capital Gains Tax Calculator](/capital-gains-tax-calculator) allows you to enter the probate value as your purchase price and model the gain on a proposed sale, so you can see your likely liability before you commit to selling.