What is Base cost?
Last verified 31 October 2026
Base cost is the starting figure used to work out a capital gain on a property: normally what you paid for it, plus allowable costs of buying and improving it. Your gain is broadly the sale proceeds minus that cost.
Why it matters to landlords
GOV.UK does not use the term but describes it: start with what you paid. Market value is used instead for a gift, a sale below value to help the buyer, an inheritance where you do not know the Inheritance Tax value, or property owned before April 1982. You can deduct the costs of buying, selling and improving, such as estate agent and solicitor fees.
Normal maintenance such as decorating does not count, so the repairs you deduct from rent are not also added here. For jointly owned property, work out the gain on your share only. Keeping the completion statement and improvement invoices makes the calculation straightforward, and if you have Capital Gains Tax to pay on a UK residential property sale, you generally have 60 days to report and pay it.
Example
Imran bought a rental house for £180,000 and paid £2,500 in conveyancing. He sells for £260,000 and pays £3,000 in agent and legal fees. His base cost is £182,500 and his selling costs are £3,000, so the gain before reliefs and the annual exempt amount is £74,500.
Capital gains tax calculator →
Related terms
- Enhancement expenditure
- Capital Gains Tax (CGT)
- 60 day Capital Gains Tax reporting
- Capital Gains Tax annual exempt amount
- Capital vs revenue expenditure