Selling an investment property can feel simple at first. You sell. You get paid. Done.
But then tax steps in. And it matters more than many landlords expect.
If you own a buy-to-let or second home in Middlesbrough and plan to sell in 2026, Capital Gains Tax is something you need to understand early. Not later. Not after completion.
Let’s walk through it.
What Is Capital Gains Tax?
Capital Gains Tax, or CGT, is the tax you pay on the profit when you sell an asset. In this case, your investment property.
It is not based on the sale price. It is based on the gain.
That gain is worked out like this:
Sale price
minus purchase price
minus allowed costs
What is left is your taxable gain.
Capital Gains Tax Rates in 2026 (UK Residential Property)
For UK residential investment properties in 2026, the CGT rates are:
| Your Income Band | CGT Rate |
| Basic rate band | 18% |
| Higher or additional rate | 24% |
You may pay a mix of both rates, depending on your income for the tax year.
Your Annual CGT Allowance
Every individual gets a tax free CGT allowance.
For 2026, this allowance is:
£3,000 per person
Only gains above this amount are taxed.
If you own the property jointly, each owner gets their own allowance. That can make a big difference.
Costs You Can Deduct
This part often gets missed.
You can deduct certain costs before tax is worked out, including:
- Purchase price
- Stamp Duty paid when you bought
- Legal fees
- Estate agent fees
- Improvement costs such as extensions or structural upgrades
General repairs do not count. New kitchens and loft conversions usually do.
Paperwork matters here. Keep it.
When and How You Must Pay CGT
This catches people out.
If you sell a UK residential investment property, you must:
- Report the gain to HMRC
- Pay the CGT
Within 60 days of completion
This is done through the UK Property Account system, not your normal Self Assessment return.
Miss the deadline and penalties apply. Quickly.
Main Home Relief and Lettings Relief
If the property was ever your main home, even for a short time, you may qualify for partial relief.
This is called Principal Private Residence Relief.
Lettings Relief is now very limited. It usually only applies if you lived in the property at the same time as your tenant.
Most buy-to-let owners do not qualify. Still worth checking.
Middlesbrough Property Prices and CGT
Middlesbrough has seen steady growth, not wild spikes. That can be good for tax.
Lower price growth often means lower gains, and sometimes lower tax. But it also means every pound saved on tax planning matters more.
Small mistakes feel bigger when margins are tighter.
Simple Planning Tips Before You Sell
A few small steps can reduce your bill:
- Sell in a year where your income is lower
- Use both spouses’ allowances if possible
- Offset losses from other assets
- Time the sale carefully if you are close to a tax band
Do not guess. Guessing costs money.
Thinking of Selling?
Selling an investment property is not just about price. It is about what you keep after tax.
At Sell House North East, we help Middlesbrough property owners sell with clarity, speed, and fewer surprises at the end.
If you want to know more about real estate investment properties, or if you want to get introduced to a good tax attorney who can help you optimise your tax position, call 01642 088037.