Do You Pay Capital Gains Tax on Remortgage?
Generally, you do not pay Capital Gains Tax on a remortgage because it is not a 'disposal' of an asset. However, if the remortgage involves a Transfer of Equity (where you sell or gift a share of the property to someone else), then CGT may be triggered.
You would need to declare and pay Capital Gains Tax if the remortgage was linked to a disposal of part of the ownership of a property that, at some point during your ownership, wasn't your Principal Private Residence. Tax is payable on the increase in value (less deductible costs) of the share you are transferring, since you acquired the property (or your share of it).
When do you pay capital gains tax on a remortgage?
When would you pay Capital Gains Tax on a Remortgage? | When wouldn't you pay Capital Gains Tax on a Remortgage? |
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Is Capital Gains Tax paid on equity release?
No, it isn't. You pay capital gains tax on the net gain on disposal of the assets, or part disposal. For example, if you buy a property for £100,000 with a £75,000 mortgage, and the property increases in value to £200,000 in 5 years, you could remortgage to release the additional £75,000 in equity.
You don't pay CGT at this point. If, in a further 5 years, the property increases to £300,000 and you sell, the calculation is £300,000 less the original £100,000, less the purchase and sale costs, less your CGT allowance. You pay CGT on the net gain.
Capital gains tax calculations don't fall under the remortgage solicitor's scope of work for a standard remortgage. If you have a complex transaction or would like expert support and advice on your tax situation, you will need to speak to an independent tax advisor.
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What if I'm remortgaging to gift a share in the property to someone else?
Where you gift the property to a connected party', then you pay Capital Gains Tax on the market value of the property, regardless of what you gave it away for.
What are the current rates for Capital Gains Tax?
For tax year 2026/2027, the basic rate for CGT is 18%. If your taxable income and capital gains exceed the higher income tax threshold for the year, you'll pay the higher rate of 24% on your taxable capital gain, less the tax free allowance.
Trustees or personal representatives of someone who has died pay CGT at the higher rate.
For more detail on calculating your CGT liability, read more on capital gains tax
Frequently Asked Questions About Capital Gains Tax on a Remortgage
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh has written extensively for SAM with expertise on sale and purchase conveyancing, the Help to Buy redemption process, equity transfers and deeds, leasehold reform, RICS home surveys, shared ownership, and independent legal advice for specialist mortgage products and ownership structures.
