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Sell or rent out your house? Tax, costs and effort compared

Should you sell or rent out your house? Capital gains tax, mortgage interest relief, selling costs and landlord duties compared, with worked examples.

4 min read
Last reviewed 4 November 2026
By Your Property Check team

Part 1 of 6

The decision in one table

General information, not tax or legal advice. Selling gives you cash now and ends your obligations. Renting out keeps you invested in the property and brings an income, and brings tax and duties of its own.

Question	If you sell	If you rent it out
Money now	Sale proceeds, less costs, tax and any mortgage	None, apart from the rent as it arrives
Tax	Capital gains tax on any gain, possibly reduced by reliefs	Income tax on rent after allowable costs
Mortgage interest	Mortgage repaid from the sale	Not deducted from rent; a 20% tax reduction instead
Ongoing work	None after completion	Repairs, tenant dealings, safety and legal duties
Reversible?	No	Yes, though ending a tenancy follows set rules

Part 2 of 6

If you sell: capital gains tax

When you sell your own home you usually pay no capital gains tax. If you have let it out, part of the gain may become taxable. The key rules on GOV.UK and the HMRC helpsheet:

The gain is the sale price minus what you paid, selling costs and improvement costs. Normal maintenance such as decorating does not count.
The annual exempt amount for 2026 to 2027 is £3,000.
Higher and additional rate taxpayers pay 24% on gains. Basic rate taxpayers pay 18% on the part of the gain that falls within their basic rate band and 24% above it.
Most UK property sales must be reported and the tax paid within 60 days.
The final 9 months of ownership always qualify for private residence relief, provided the property was your main home at some point.
Lettings relief now applies only where part of the home was let while another part was your main home. It is capped at £40,000 and does not apply if you let the whole property for a time.

Our guides on capital gains tax when you sell a house and private residence relief go through each rule, and the CGT calculator works out a figure.

Worked example, with assumed inputs. You bought for £150,000 and sell for £250,000. Assume £8,000 of allowable buying, selling and improvement costs. The gain is £250,000 minus £150,000 minus £8,000, which is £92,000. After the £3,000 allowance, £89,000 is taxable. If all of it were taxed at 24%, the bill would be £21,360. If part falls in the 18% band, it would be lower. Relief for time lived in the property could reduce it further. These are our assumptions, not your figures.

Part 3 of 6

If you sell: other costs

The estate agent's fee is usually the largest. Citizens Advice says agents calculate it as a percentage of the sale price, from less than 1% to 3.5%, and that you should check whether VAT and extras are included. On £250,000 that is £2,500 to £8,750 before VAT. Add legal fees and moving costs, covered in how much it costs to sell a house and how much it costs to move house. Many agents value a property for free, so you can compare views from two or three before deciding.

Part 4 of 6

If you rent it out: tax on the income

Rent is taxable income, after allowable costs. The big change for mortgaged landlords is the finance cost restriction, often called Section 24. GOV.UK explains that mortgage interest is no longer deducted from rental income. Instead you get a tax reduction equal to 20% of the lowest of your finance costs, your property profits and your income above the personal allowance. It cannot create a refund.

Worked example, with assumed inputs. Annual mortgage interest of £6,000 gives a tax reduction of £1,200 (20% of £6,000), whatever your tax band. GOV.UK's own case studies show one landlord whose tax is unchanged and another, on a higher income, who pays £1,600 more than before. Use the Section 24 calculator for your numbers, and the keep or sell calculator to weigh the income against the equity tied up.

Part 5 of 6

If you rent it out: duties and exit

A landlord takes on safety, repairs and tenancy rules, and the rules for ending tenancies have changed. Our articles on what replaced Section 21 and on selling when a tenant is in place explain how a later sale works, and EPC rules for landlords covers an energy certificate duty. If you later sell the let property, private residence relief covers the years it was your main home and the final 9 months, but not the whole period.

Part 6 of 6

A simple way to decide

Work out what you would receive after tax and costs if you sold now.
Work out the yearly net rent after costs, interest credit and tax.
Ask whether the net rent is a reasonable return on the money tied up in the property.
Ask whether you want the work and the risk.

None of this predicts prices or rents. Rules and rates were checked on 4 November 2026 and a Budget can change them. This page is general information, not advice, and a tax adviser can check your own position.

Our take

Price the sale before you decide to let

Our view: decide on net figures, not hopes. Work out what you would receive after tax and costs if you sold now, then the yearly net rent after costs, interest credit and tax, and ask whether that is a fair return on the money tied up. The common mistake is comparing a gross rent with a sale price.

Our free house valuation gives a value range from real HM Land Registry sold prices in your postcode, with the working shown, which is the starting figure for the sell side. To test the rent side, use our property deal analyser, a free ROI calculator anchored to a value range.

Check my value

Our opinion, drawn from the facts on this page: not advice and not a forecast. We earn from OfferCheck reports and from introducing sellers to cash buyers, so weigh it with that in mind (see our disclosure). We are not authorised or regulated by the FCA.

Questions, answered

Frequently asked questions

Should I sell or rent out my house?

It depends on your numbers. Compare what you would keep after capital gains tax and selling costs with the yearly net rent after costs and tax. Also weigh the effort and duties of being a landlord. A calculator and a tax adviser can help.

Will I pay capital gains tax if I sell a house I have rented out?

Possibly. You usually owe none on your main home, but letting can make part of the gain taxable. The final 9 months of ownership always qualify for private residence relief. GOV.UK gives the rates as 18% or 24% after a £3,000 allowance for 2026 to 2027.

What is Section 24 for landlords?

It is the restriction on mortgage interest relief for residential landlords. Interest is no longer deducted from rent; instead you get a tax reduction of 20% of the lowest of finance costs, property profits and income above the personal allowance.

How much does it cost to sell a house?

Estate agent fees are usually the biggest cost. Citizens Advice says they range from less than 1% to 3.5% of the sale price, so £2,500 to £8,750 on £250,000 before VAT, plus legal and moving costs.

Can I change my mind after renting it out?

You can sell later, but the sale then follows the rules on tenants and tax. Selling with a tenant in place or with vacant possession are both possible routes. Check the tenancy rules first.

Where this comes from

Sources

Last reviewed 4 November 2026 by the Your Property Check team. This page is general information, not legal, tax or financial advice. For your own situation, speak to a conveyancing solicitor or another qualified professional.