Source: The Telegraph

Selling a buy-to-let property can trigger a substantial capital gains tax (CGT) bill, but there are several ways for landlords to reduce their tax liability and maximise profits.

For the 2025–26 tax year, CGT rates on residential property are 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, with a £3,000 annual exemption (£1,500 for trusts). Landlords must report and pay CGT within 60 days of completion via the HMRC online system.

The Telegraph outlines five main strategies to minimise tax:

1. Use available reliefs – Deduct costs such as agents’ and solicitors’ fees, stamp duty, and qualifying home improvements.

2. Move into the property – Genuine occupation as a main home can trigger Private Residence Relief, reducing or eliminating CGT.

3. Incorporate – Holding property in a limited company can reduce tax rates (19–25%) and allow full deduction of mortgage interest, though incorporation costs and HMRC scrutiny must be considered.

4. Share ownership with a spouse or civil partner – Couples can combine their CGT allowances and transfer ownership to the lower-rate taxpayer before selling.

5. Invest proceeds tax-efficiently – Reinvesting in Real Estate Investment Trusts (REITs) or property funds within an ISA can deliver market exposure without direct landlord responsibilities.

Accountancy firm Saffery warns that HMRC examines claims for residence relief closely, while RSM advises landlords to weigh up CGT impacts across their full property portfolios before making structural changes.

The article concludes that with rising tax complexity, careful planning is essential to avoid costly mistakes and ensure buy-to-let exits remain financially viable.