Should I keep or sell my rental property?
Compare two paths: keep the property and collect the rent, or sell now, pay the tax and invest what is left. Both are worked out to the same point in time so they can be compared fairly.
How this is calculated
Sell now: the sale price less selling costs, the mortgage and capital gains tax is invested at the return you enter and grows each year.
Keep: each year the rent less running costs, mortgage interest and the rental tax you enter is reinvested at the same return. The property grows at the rate you enter, and its worth in any year is what you would have if you sold then, after selling costs, the mortgage and capital gains tax.
Capital gains tax uses one rate on the gain above the £3,000 annual exemption. Use the capital gains tax calculator for a precise figure on a sale now. Mortgage rates are held flat, and the mortgage is assumed to be interest only.
Rates and assumptions used
| Capital gains tax rates | 18% or 24% |
| Annual exempt amount | £3,000 |
Statutory rates last checked July 2026. Source: HMRC and gov.uk.
Worked example
A £250,000 property with a £150,000 interest-only mortgage at 5%, which cost £180,000 in total, lets for £1,200 a month. Selling now leaves £80,120 after costs, the mortgage and £14,880 of capital gains tax, which grows to £130,507 in ten years at 5%. Keeping it, with 2% growth in rent and value, leaves £160,073 if sold in year ten, so keeping comes out about £29,600 ahead. Set value growth to zero and the answer changes, which is the point of testing it.
Common questions
What return should I use for selling?
A realistic figure for where the money would actually go, after tax. Cash savings, paying off other debt, or an index fund in an ISA all give different answers. Try a few.
Why does keeping often win over long periods?
Because the mortgage magnifies growth on the whole property value while only your equity is at stake. The same leverage works against you if values fall, which is why it is worth setting growth to zero to see the downside.
What is not included?
Refinancing costs, changes in the mortgage rate, voids, major works, and changes to tax rules. The comparison is only as good as the assumptions you enter.
Capital gains tax on selling a rental
CGT at 18% and 24% after costs, improvements and the exemption, and the cash left after the mortgage.
Section 24 landlord tax calculator
Tax on rental profit with the 20% interest credit, compared with owning through a company.
Remortgage stress test calculator
What happens to cash flow when your fix ends, and whether a lender would still refinance.