Selling a rental property in retirement: Capital Gains Tax and timing
Updated 19 October 2026. Figures checked against official sources on 19 October 2026.
Selling a buy-to-let or second home is taxed on the gain: the sale price less what you paid, the buying and selling costs, and what you spent improving it. The first £3,000 of gains each year is tax-free. Above that, gains within your basic rate band are taxed at 18% and the rest at 24%.
From 87, your income falls short of the £30,000 a year you want.
Worked example
From 87, your income falls short of the £30,000 a year you want.
- Age now
- 62
- Retire at
- 63
- Pots
- £260,000
- Take-home wanted
- £30,000 a year
- Plan until
- 95
A worked example
A rental flat worth £210,000 (today's money), with a mortgage, sold at 66:
- Mortgage paid off: £36,238
- Capital Gains Tax: about £21,941
- Into savings: £151,821
Before the sale, the rent is taxed as income. In this example the plan's money falls short from 87 on steady growth, against the £30,000 a year wanted.
The 60-day deadline
A UK resident selling a UK home that isn't their main home reports and pays any Capital Gains Tax within 60 days of completion. If the gains are under the tax-free allowance, there's nothing to report online.
What lowers the gain
- Buying costs, such as Stamp Duty and legal fees.
- Improvements, such as an extension (not repairs or upkeep).
- Selling costs, such as estate agent and legal fees.
In the calculator
The calculator's Property and things you'll sell step takes the value, what you paid, any mortgage, the rent and the age you'd sell. The money from the sale goes into a savings pot. Try the calculator with your own figures.
Questions people ask
How much tax will I pay selling a buy-to-let?
Capital Gains Tax on the gain above £3,000: 18% within your basic rate band, 24% above it. In our worked example the tax is about £21,941.
When do I pay Capital Gains Tax on a property sale?
Within 60 days of completion, if you're a UK resident and there's tax to pay.
Can I reduce Capital Gains Tax on a rental property?
The gain is lower after buying costs, improvement costs and selling costs. The tax-free allowance is £3,000 a year for each owner.
Sources
Rates and rules were checked against these on 19 October 2026. Worked-example figures come from the calculator, using 2026/27 tax rules.