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Capital Gains Tax on a second home

Selling a second home or rental property for a profit can mean a tax bill. Here is how it is worked out, with examples.

The short answer

You pay Capital Gains Tax (CGT) on the profit from selling a second home, not on the whole price. After a £3,000 annual allowance, the gain is taxed at 18% or 24% in 2026/27, depending on your income. You must report and pay within 60 days of completion. For your own figure, use the Capital Gains Tax calculator.

Working out the gain

Start with the sale price and take off what you paid, plus allowable costs such as legal and estate agent fees, stamp duty and the cost of improvements like an extension. Repairs and maintenance do not count.

Worked example

A second home bought for £200,000 sells for £300,000, with £10,000 of costs. The gain is £90,000. After the £3,000 allowance, £87,000 is taxable.

  • On a £30,000 income, about £20,270 of the gain fits in the basic-rate band at 18%, and the rest at 24%. The tax is about £19,664.
  • On a £60,000 income, the whole gain is at 24%, so the tax is £20,880.

The 60-day deadline

For UK residential property that is not your main home, you must report the gain to HMRC and pay the tax within 60 days of completion. Missing it can mean a penalty and interest. See GOV.UK: Report and pay Capital Gains Tax on UK property.

Ways to reduce the bill

  • Deduct every allowable cost, and keep records of improvements.
  • Use your £3,000 annual allowance, and your partner's if the property is jointly owned. A transfer to a spouse or civil partner is usually free of CGT.
  • Use any capital losses you have reported.
  • Think about timing. A sale just after the tax year ends gives you a new allowance.

If it was once your main home

Your main home is normally exempt from CGT. If you lived in a property before letting it out or moving, part of the gain may be covered by Private Residence Relief. The rules depend on how long you lived there, so check them or ask an accountant. See GOV.UK: Tax when you sell your home.

Where to learn more

This guide is for information only and is not tax advice.

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