Selling a Second Home in the UK

Selling a second home — whether it is a holiday cottage, a former main residence you have moved out of, or a property you inherited — involves a set of tax and timing considerations that do not apply when selling your main home. Capital Gains Tax is the most significant difference, but there are also implications for stamp duty on any replacement purchase, mortgage redemption, and the 60-day reporting deadline that catches many sellers off guard.

This guide covers the full picture: how CGT is calculated on a second home, the reliefs and exemptions that may reduce your bill, timing strategies, and how the conveyancing process differs from a main home sale. For a broader view of all the costs involved in selling any property, see our guide to the hidden costs of selling a house.

Capital Gains Tax on a second home

When you sell your main residence, you are normally exempt from Capital Gains Tax under Private Residence Relief. A second home does not benefit from this exemption, and any profit you make on the sale is subject to CGT. The tax is governed by the Taxation of Chargeable Gains Act 1992, with rates and allowances set by the Chancellor each year.

CGT rates for 2025–26

Following the Autumn Budget 2024, CGT on residential property for the 2025–26 tax year is charged at the following rates:

Your tax band is determined by adding the taxable gain to your income for the year. A basic rate taxpayer with a large gain may find part of it taxed at 24% if the total pushes them above the £50,270 threshold. You can check the latest rates on the GOV.UK Capital Gains Tax rates page.

The annual exempt amount

Every individual has an annual tax-free CGT allowance of £3,000 for the 2025–26 tax year. If your total capital gains for the year fall below this amount, no CGT is due. The allowance has been cut sharply in recent years — from £12,300 in 2022–23 to £6,000 in 2023–24, and then to £3,000 from April 2024.

If the property is jointly owned with a spouse or civil partner, each owner has their own £3,000 exemption, potentially sheltering £6,000 of the combined gain.

Calculating the gain on a second home

The basic formula for working out your taxable gain is:

Sale price − Purchase price − Allowable costs − Annual exempt amount = Taxable gain

Allowable deductions

HMRC allows you to deduct the following costs from the sale price before calculating your gain:

• The original purchase price
• Stamp Duty Land Tax paid on acquisition, including any higher rate surcharge for additional dwellings
• Solicitor and conveyancer fees on both the purchase and the sale — see our conveyancing costs breakdown for typical figures
• Estate agent commission on the sale
• Capital improvement costs — such as an extension, loft conversion, or new kitchen — but not routine repairs or maintenance

Costs you cannot deduct

• Mortgage interest payments
• Buildings or contents insurance
• Routine repairs and maintenance
• Council tax and utility bills
• Letting agent or property management fees

Worked example

The following example shows CGT for a higher rate taxpayer selling a second home they have owned for 12 years, with no period of occupation as a main residence.

In this example, the seller would owe £24,657.60 in CGT, payable within 60 days of legal completion.

The 60-day reporting requirement

Since 27 October 2021, UK residents who sell a residential property at a gain must report it and pay the CGT due within 60 days of the legal completion date. This is done through HMRC's 'Report and pay Capital Gains Tax on UK property' service, which is separate from Self Assessment.

The 60-day clock starts on the day of legal completion, not exchange of contracts. If you miss the deadline, HMRC may charge a £100 late filing penalty, with additional penalties if the return is more than six months late, plus interest on any unpaid tax. Even if you file a Self Assessment return, the 60-day property return is a separate requirement. You must still include the gain on your Self Assessment return for the year, but any tax already paid under the 60-day return is credited.

Your solicitor can help you with the completion date and the figures you need to report. For a full explanation of what your solicitor handles during the sale, see our guide on what your solicitor actually does.

Private Residence Relief and second homes

Private Residence Relief (PRR) is the exemption that shelters the gain on your main home from CGT. Under section 222 of the Taxation of Chargeable Gains Act 1992, a property qualifies for PRR if it has been your only or main residence throughout your ownership. A second home does not normally qualify, but partial relief may be available in certain circumstances.

Partial relief for periods of occupation

If you lived in the property as your main home for part of your ownership — for example, before buying a new main residence and keeping the original property — you can claim PRR for those periods. The gain is apportioned on a time basis. If you owned the property for 10 years and lived in it as your main home for three of those years, roughly 30% of the gain would be covered by PRR (plus the final period exemption).

The final nine months

If you have any qualifying period of occupation as your main home, the final nine months of ownership are automatically exempt from CGT, regardless of whether you were living there. This was reduced from 18 months in April 2020. The relief only applies if the property was your main residence at some point — it does not apply to a property that has never been your main home.

Main residence election

If you own two properties and live in both, you can nominate which one should be treated as your main residence for CGT purposes. You must make this election by writing to HMRC within two years of acquiring the second property. The nomination can be changed at any time, but changes only take effect from the date HMRC is notified. Careful use of main residence elections can significantly reduce CGT on whichever property you eventually sell.

Lettings Relief

Prior to April 2020, Lettings Relief could shelter up to £40,000 of additional gains on a property that had been both your main home and let out to tenants. Since April 2020, it only applies where you are in shared occupation with a tenant — meaning you and the tenant both live in the property at the same time. For the vast majority of second home sellers who let out a former main residence after moving out, Lettings Relief is no longer available.

Strategies to reduce your CGT bill

While you cannot avoid CGT entirely on a second home, there are legitimate ways to reduce the amount you owe:

1. Claim every allowable deduction. Gather records of all costs associated with buying, improving, and selling the property. Improvement receipts from years ago can make a meaningful difference.
2. Use both annual exemptions. If you jointly own the property with a spouse or civil partner, each of you can apply your £3,000 exemption. If the property is not already jointly held, you can transfer a share to your spouse CGT-free before the sale to use both allowances.
3. Offset capital losses. If you have made a capital loss on another asset in the same tax year, or have losses carried forward from previous years, these can be set against the property gain.
4. Time the sale carefully. If you are selling multiple assets, spreading disposals across different tax years allows you to use two years' worth of annual exemptions.
5. Consider pension contributions. Making pension contributions in the same tax year as the sale can reduce your income, potentially keeping you in the basic rate band and lowering your CGT rate from 24% to 18%.
6. Get professional advice. A tax adviser can review your specific circumstances and identify reliefs you may not be aware of. The cost of advice is usually far outweighed by the tax saved.

How selling a second home differs from selling a main residence

The conveyancing process itself is broadly the same — your solicitor prepares the contract pack, the buyer's solicitor raises enquiries, and you proceed through exchange and completion. For a step-by-step timeline, see our guide on how long conveyancing takes. However, there are several important differences when selling a second home:

• CGT liability. The most significant difference. Your main home is exempt; a second home is not.
• 60-day reporting. You must report the gain and pay any CGT within 60 days of completion, a deadline that does not apply to a main home sale.
• Stamp duty on your next purchase. If you still own another residential property when you buy a replacement, you may be liable for the higher rate SDLT surcharge (currently an additional 5% on top of standard rates).
• Mortgage considerations. If the second home has a mortgage, it must be redeemed on completion. Check for early repayment charges, particularly if you are within a fixed-rate period.
• Empty property issues. If the second home is unoccupied, you may face higher insurance premiums, council tax surcharges in some local authority areas, and the need to maintain the property during the sale period.

For a comprehensive overview of costs you may not have considered, see our guide to hidden costs of selling a house. If you are also selling an investment property with tenants, our guide to selling an investment property in the UK covers the additional complexities of tenant rights and the Renters' Rights Bill.

Record keeping

Good record keeping throughout your ownership is essential. HMRC requires you to keep records for at least four years after the end of the tax year in which you filed your CGT return. In practice, you should retain the following for the entire period of ownership:

• The completion statement from the original purchase
• Stamp duty payment confirmation
• Solicitor invoices for both purchase and sale
• Receipts and invoices for all capital improvement works (not routine repairs)
• Estate agent fee invoice
• Any letting agreements and records, if the property was rented out during your ownership

Sources and further reading

• Capital Gains Tax — Overview (GOV.UK)
• Capital Gains Tax Rates and Allowances (GOV.UK)
• Report and Pay Capital Gains Tax on UK Property (GOV.UK)
• Tax When You Sell Your Home (GOV.UK)
• Taxation of Chargeable Gains Act 1992 (legislation.gov.uk)
• TCGA 1992, Section 222 — Relief on Disposal of Private Residence (legislation.gov.uk)
• Autumn Budget 2024 (GOV.UK)

Frequently asked questions