Allowable Costs for CGT on Property: The Home-Seller’s Essential Guide

Sold a second home, buy-to-let or a partially chargeable main home? Slash your Capital Gains Tax (CGT) bill by knowing exactly which expenses HMRC lets you deduct — and which will be kicked out.

Below you’ll find a time-saving, plain-English guide tailored for busy UK homeowners aged 30-49 who just want the right numbers, right now. You’ll learn:

• All HMRC-approved allowable costs for CGT on property
• Common misconceptions about what can (and can’t) be deducted
• A step-by-step, real-life calculation using up-to-date tax rates
• Record-keeping hacks to defend your claim in minutes, not months
• How the fixed-fee SwiftCGT service (£299 sole / £449 joint) files your return within three working days

TL;DR — Quick Answer for the Time-Poor

If you only have 60 seconds, here’s the executive summary:

1. Purchase costs (stamp duty, legal fees, survey fees) are deductible.
2. Sale costs (estate-agent fees, legal fees, EPC, marketing) are deductible.
3. Improvement costs that add value or extend the property are deductible; repairs and maintenance are not.
4. Mortgages, interest, and everyday running costs are never deductible against CGT.
5. Keep invoices, bank statements and completion statements. HMRC can ask for proof up to 5 years after the 31 January filing deadline.
6. Use SwiftCGT to calculate, claim and file your CGT return online in three working days — no spreadsheets, no stress.

1. Why “Allowable Costs” Matter When Calculating CGT

Capital Gains Tax on UK residential property is charged on your net gain — that’s the difference between what you paid for the property and what you sold it for, after deducting any CGT allowable expenses. Get those deductions right and you can legally cut thousands off your tax bill. Get them wrong and HMRC may hit you with extra tax, interest and penalties.

The stakes are higher than ever because, since 2020, sellers have just 60 days to report and pay their CGT. There’s no time for guesswork.

2. What Can I Deduct from Capital Gains Tax? (The Complete Allowable-Cost List)

HMRC’s guidance is scattered across several manuals, so we’ve consolidated it into three buckets:

2.1 Purchase-Related Costs

• Stamp Duty Land Tax (SDLT) — including the 3% second-home surcharge
• Legal conveyancing fees and searches
• Land Registry fees
• Surveys and valuation reports required for purchase
• Mortgage broker and arrangement fees (yes, you can deduct these!)

2.2 Selling-Related Costs

• Estate-agent or online-agent fees (including VAT)
• Legal fees for conveyancing on the sale
• Energy Performance Certificate (EPC) cost
• Advertising and professional photography / video tours
• Removal of tenants or surrender premiums paid to end leases

2.3 Capital Improvement Costs

These are costs that create an enduring asset or enhance the property’s value, such as:

• Extensions, loft conversions or conservatories
• Re-wiring or re-plumbing the entire property
• Installing central heating or double glazing for the first time
• Adding a new kitchen or bathroom (where the old one is removed)
• Landscaping that substantially changes the layout (e.g., adding decking, outbuildings)

All improvements must still be reflected in the property’s state at the time of sale. If you built a conservatory and later knocked it down, you can’t claim the cost.

3. Costs You Cannot Deduct

Equally critical is knowing what’s off-limits. HMRC will disallow:

• Routine repairs and maintenance (painting, fixing broken windows, boiler servicing)
• Decoration to make the property “sale-ready” (fresh paint, staging furniture)
• Mortgage interest and capital repayments
• Insurance premiums and council tax
• Fines, penalties or late-payment interest
• Personal time or DIY labour costs (even if you’re a qualified tradesperson)
• Any improvements later removed or replaced before sale

4. Worked Example: Calculating CGT with Allowable Expenses

Let’s run the numbers for Sarah and Tom, both 38, who sold their London buy-to-let in May 2024.

Description£Sale price (May 2024)650,000Purchase price (June 2014)400,000Gain before costs250,000

Step 1: Deduct Purchase Costs

• SDLT (including surcharge): £14,000
• Legal fees and surveys: £2,500
• Mortgage arrangement fee: £1,000

Total purchase costs: £17,500

Step 2: Deduct Selling Costs

• Estate-agent fees (1.2% inc. VAT): £7,800
• Legal fee: £1,600
• EPC & marketing: £300

Total sale costs: £9,700

Step 3: Deduct Improvement Costs

• Loft conversion (2018): £35,000
• New kitchen (old removed): £12,000

Total improvements: £47,000

Step 4: Calculate Net Gain

Initial gain £250,000 − £17,500 − £9,700 − £47,000 = £175,800

Step 5: Split Gain (Joint Owners)

Sarah and Tom own 50/50, so each reports £87,900.

Step 6: Apply Annual Exemption (2024/25)

CGT annual exempt amount is £3,000 each.

Taxable gain per person: £87,900 − £3,000 = £84,900

Step 7: Work Out Tax Rate

Both are higher-rate taxpayers, so residential property CGT is 24% (rate from April 2024).

CGT each: £84,900 × 24% = £20,376

Total CGT bill: £40,752

Without claiming allowable costs (£74,200 in total), their CGT would have been £58,000 — a £17,248 saving.

5. Record-Keeping Tips to Protect Your Deductions

HMRC can enquire up to four years after you file (longer if they suspect careless or deliberate error). Future-proof your claim:

1. Digital folder per property — store PDFs of all invoices, contracts and bank statements.
2. Label clearly (e.g., “2021-04-12 Loft Conversion Invoice £35k”).
3. Keep photos before and after improvements to prove enhancement.
4. Scan paper docs — ink fades; HMRC accepts digital copies.
5. Back-up to cloud and an external drive.

6. Frequently Overlooked Allowable Expenses

Even seasoned landlords miss these:

• Lease extension premiums — if you paid to extend a lease before selling a flat, that premium is an allowable cost.
• Planning application & architect fees for improvements.
• Redemption fees for repaying a fixed-rate mortgage early — counted as a selling cost.
• Costs of securing vacant possession (e.g., paying tenants to leave).

7. How SwiftCGT Makes 60-Day Reporting Effortless

Calculating your gain is half the battle. Filing within 60 days is the other. Here’s why thousands of UK sellers choose SwiftCGT:

• Fixed fees: £299 for a sole owner, £449 for joint owners (50% discount on the second return).
• Lightning turnaround: HMRC-registered chartered accountants prepare and submit your CGT return within three working days.
• Fully online: Upload your completion statement and invoices in minutes.
• Peace of mind: Digital PDF of the filed return plus payment reference; accountants deal with HMRC queries.
• No hidden extras: Unlimited email support until your CGT is paid.

Get started with SwiftCGT today »

8. Action Plan: Your Next 5 Moves

1. Gather purchase, sale and improvement documents now.
2. Create a draft gain calculation using the lists above.
3. Check you haven’t missed any of the sneaky allowable costs in Section 6.
4. Open a SwiftCGT account and upload your files.
5. Approve your return, pay HMRC and tick CGT off your to-do list.

9. Key Takeaways

• Only capital costs — buying, selling and value-adding improvements — reduce your CGT.
• Repairs, interest and decoration don’t count.
• Good records are your best defence in an HMRC enquiry.
• SwiftCGT handles the maths, the paperwork and the deadline for a fixed, transparent fee.

Save time, cut tax, stay compliant.