How Much Capital Gains Tax Will You Pay When You Sell a Second Home?

Sell a second home in the UK in 2026/27 and you pay capital gains tax at 18% or 24% on the gain above your £3,000 annual exempt amount, and where tax is due you have 60 days from completion to report it and pay it. The 18% applies only to the slice of the gain that fits in whatever is left of your basic rate band once your income is counted. Everything above that is taxed at 24%. There is no separate second home rate, no taper for long ownership, and no threshold below which a big gain escapes.

That is the whole answer in one paragraph. What you actually owe depends on what you can deduct, whether you ever lived in the property, and who owns it. Capital gains tax on selling a second home is worked right through below at 2026/27 figures, with what Private Residence Relief and a spousal transfer are worth in pounds, the 60-day deadline, and an honest account of which popular routes to avoid capital gains tax on a second property fail. For property gains in general rather than second homes, the complete guide to capital gains tax on property goes wider.

What counts as a second home for capital gains tax?

Any residential property you own that is not your main home. A second property, a secondary home, a holiday place: for tax purposes those are the same thing, a residential property whose gain is fully chargeable because no relief attaches to it as your residence. There is no reduced rate of CGT on second property, however long you have held it.

You are probably reading this because of a situation that will sound familiar. You bought a holiday flat or cottage and are now selling it. You kept your old flat when you moved in with a partner and let it out or left it empty. You inherited a property and held onto it. Or you bought somewhere for a child at university. The tax treatment is the same in each case, though your base cost differs: an inherited property starts at its probate value, not what the person who left it to you paid.

The stamp duty surcharge you paid when you bought comes up constantly and is not relevant to the rate, although it does become an allowable cost here. It has been 5% since 31 October 2024, was 3% from April 2016, and did not exist before that, so what you actually paid depends on when you bought. It also has its own rules if you own property abroad. Ownership length is the other red herring: a gain built over 25 years is taxed at exactly the same 18% and 24% as one built over 25 months.

How do you work out capital gains when selling a second home?

Start with what you sold it for, take off what you paid for it, then take off the costs at both ends and any capital improvements in between. What is left is your gain. Then the £3,000 annual exempt amount comes off, and the rest is taxed. Capital gains tax when selling a second property is charged on that figure, not on the sale price and not on the cash you walk away with after clearing the mortgage.

The mortgage point causes more shocks than anything else here. Repaying the loan is not a deduction. Capital gains on second home sales are worked out on the property, not on your bank balance, so a heavily mortgaged flat can produce a large taxable gain and very little cash.

The deductible costs are narrower than most people expect:

• On the way in: the purchase price, the Stamp Duty Land Tax (SDLT) you paid including any surcharge, solicitor fees, survey fees and any auction or finder fees.
• While you owned it: capital improvements only. An extension, a loft conversion, a first-time central heating installation or putting in a kitchen where there was none. The improvement has to still be reflected in the property at the point you sell.
• On the way out: estate agent commission, marketing costs, and the solicitor or conveyancer fee on the sale.

The costs you cannot deduct catch people out every time: mortgage interest, mortgage arrangement and redemption fees, insurance, council tax, ground rent, utilities, repairs, redecoration, replacing a worn-out kitchen with a similar one, and anything you have already claimed against rental income. You do not get to use the same expenditure twice.

Keep the paperwork. If you spent £31,000 on an extension and cannot evidence it, you are handing HMRC roughly £7,440 of tax on a deduction you were entitled to. Old invoices, bank statements and building control certificates all help.

How much capital gains tax on a second property? A worked example

The answer turns on the size of the gain and the size of your income, so start with the gain. Take a holiday flat in Cornwall, bought in January 2010 and never lived in, sold in September 2026. Because the purchase came years before any second-home stamp duty surcharge existed, the costs on the way in were small. The owner earns a salary of £42,000.

Item	Amount
Sale price	£455,000
Less agent and legal fees on sale	(£8,700)
Net proceeds	£446,300
Less purchase price	(£212,000)
Less SDLT, legal and survey on purchase	(£3,300)
Less single storey extension	(£31,000)
Chargeable gain	£200,000
Less annual exempt amount	(£3,000)
Taxable gain	£197,000

Selling a second home: capital gains tax on a £200,000 gain

Now the rate split, which is where people go wrong. Your gain is stacked on top of your income for the year. The salary of £42,000 less the £12,570 personal allowance leaves £29,430 of taxable income, and the basic rate band is £37,700 wide. So £8,270 of basic rate band is unused, and only that much of the gain gets the 18% rate.

Slice	Rate	Tax
£8,270 (unused basic rate band)	18%	£1,488.60
£188,730	24%	£45,295.20
Total CGT due		£46,783.80

That is a shade under £46,800, payable within 60 days of completion, which for a September completion means November. If you have already spent the proceeds on the next purchase, you have a problem. Run your own numbers through the capital gains tax calculator before you accept an offer, not after.

Notice how thin the 18% slice is. On a gain of this size the effective rate is 23.4%, barely below the headline 24%. If the owner earned £55,000 instead, there would be no basic rate band left at all and the whole £197,000 would be taxed at 24%, giving £47,280. The 18% rate is real but it is usually worth a few hundred pounds, not thousands.

Does Private Residence Relief apply to a second home?

Only if the property was, at some point, your only or main residence. If you have never lived in it, you get nothing. If you did live in it, the relief is time-apportioned: you get the fraction of your ownership period when it was your main home, plus the final 9 months of ownership regardless of where you were living then. Answer that question carefully before you assume the whole gain is chargeable, because it moves the number further than anything else on this page.

Take the same flat, but assume you lived in it as your only home for the first 40 months of the 200 months you owned it, before it became a holiday place. Relief covers 49 of those 200 months, which is 24.5% of the gain:

• Gain £200,000, relieved portion 24.5% = £49,000
• Chargeable gain after relief = £151,000
• Less £3,000 annual exempt amount = £148,000 taxable
• £8,270 at 18% = £1,488.60, plus £139,730 at 24% = £33,535.20
• Total CGT = £35,023.80, a saving of £11,760

Three and a bit years of genuine occupation took nearly twelve thousand pounds off the bill, which is why whether the property was ever really your home matters more than any planning idea you will be sold. What HMRC looks for is quality of occupation, not a date on a form: where your post went, where you were registered to vote and with a GP, what the utility bills show. A fortnight with a mattress in an empty flat is not a residence.

If you own two properties and both are genuinely residences, you can nominate which one counts as your main home, and the timing rules on that are strict. The mechanics are set out on our page about the main residence election where you have two properties. For the full relief detail including deemed occupation periods, see Private Residence Relief.

One relief that will probably not help you: letting relief. Since April 2020 it only applies where you shared occupation of the property with your tenant. If you moved out and let the whole place, it is gone, whatever an older article told you. The letting relief page covers what survived.

What if you own the second property with your spouse?

You are taxed separately on your own share, which means two annual exempt amounts and two basic rate bands. Take the same £200,000 gain, owned equally by a couple where one earns £42,000 and the other £20,000, so £100,000 of gain each:

• Higher earner: £100,000 less £3,000 = £97,000. £8,270 at 18% = £1,488.60, £88,730 at 24% = £21,295.20. Total £22,783.80.
• Lower earner: £100,000 less £3,000 = £97,000. £30,270 at 18% = £5,448.60, £66,730 at 24% = £16,015.20. Total £21,463.80.
• Combined £44,247.60, against £46,783.80 in one name. Saving £2,536.20.

The extra allowance is worth £720 and the extra basic rate band £1,816.20. Useful, but notice the scale: on a gain this size, joint ownership saves about £2,500, not a fortune. On a smaller gain the second £3,000 allowance matters proportionately more.

If the property is currently in one name, you can transfer a share to your spouse or civil partner before the sale. That transfer is treated as happening at no gain and no loss, so nothing is taxable on the transfer itself and your spouse takes over your original base cost. Three conditions matter in practice. The transfer must be of the beneficial interest, evidenced properly, not a verbal arrangement. It must complete before you exchange contracts on the sale, because after exchange the disposal has already happened for CGT. And if your spouse takes on a share of an outstanding mortgage, SDLT can be triggered on the debt assumed.

Joint owners who are not married are treated quite differently. Each owner is taxed on their beneficial share and each has their own allowance, but there is no no-gain-no-loss route between you. Moving a share between unmarried joint owners is a disposal at market value, with tax on it.

When do you report and pay capital gains tax on a second home sale?

Within 60 days of completion, through HMRC's online UK property service, where tax is due. You file the return and pay the tax in the same 60 days. This is not your Self Assessment return; the sale then goes on that too, with the 60-day payment credited against your final bill.

If no tax is due, because relief, losses or the annual exempt amount cover the whole gain, a UK resident has no 60-day return to file. Non-UK residents are in a stricter position and must file within 60 days of every UK land disposal whether tax is payable or not.

Miss the deadline and you get a £100 fixed penalty straight away, daily penalties of £10 from day 91, and further charges of 5% of the tax at 6 months and again at 12 months, with interest running on top. The CGT payment deadlines page goes through the filing mechanics in detail.

The practical point: 60 days is short. Instruct whoever is doing your computation when the sale is agreed, not when it completes, because valuing improvements and reconstructing 15-year-old purchase costs takes longer than you think.

How can you legally reduce capital gains tax on a second property?

The honest answer is that nothing here is exotic. Roughly in order of how much each is usually worth:

• Claim every allowable cost. The single biggest under-claim is improvement expenditure nobody kept the invoices for. At 24%, every £1,000 of forgotten spend costs you £240.
• Get Private Residence Relief right. If the property was ever genuinely your home, the relief is time-apportioned and the final 9 months are free. Establish the dates properly rather than guessing.
• Use both spouses' allowances and bands. Transfer a beneficial share before exchange, as above.
• Bring in capital losses. Losses on other assets in the same tax year must be set against the gain before the annual exempt amount. Losses brought forward from earlier years are used only down to the level of the exempt amount, so you do not waste it. If a property sale itself produced a loss, our page on claiming capital losses on property covers the claim.
• Make a pension contribution. A personal contribution extends your basic rate band, moving more of the gain from 24% to 18%. A £10,000 net contribution widens the band by £12,500 and saves £750 of CGT on top of the income tax relief. Gift Aid donations work the same way.
• Time disposals across tax years. Your gain falls into the tax year of exchange, not completion. If you are selling two properties, exchanging in different tax years gives you two annual exempt amounts and two basic rate bands. That means real contract dates driven by the transaction, not paperwork dated to suit.

None of these makes a large gain vanish. Taken together on the example above, the realistic range is a few thousand pounds off a £46,800 bill, plus whatever relief the occupation history supports. Anyone promising more than that is selling you something.

Can you avoid capital gains tax on a second property?

Mostly no, and better to hear it now than after paying for a scheme. The routes below are the ones suggested whenever anyone asks how to avoid capital gains tax on second property. All of them fail, and some fail expensively.

"Move into it for six months and the gain is tax free." Private Residence Relief is apportioned over the whole ownership period. Six months of genuine occupation out of 15 years buys you those six months plus the final 9 months, so about 8% of the gain. It does not clear the rest. Worse, moving in briefly with no intention of living there is exactly the pattern HMRC challenges, and if the occupation is not genuine you get nothing at all.

"Gift it to the children instead of selling." A gift to anyone other than your spouse or civil partner is a disposal at market value. You pay the same CGT you would have paid on a sale, but with no cash coming in to pay it. On top of that the gift starts a seven-year clock for inheritance tax, and if you carry on using the property, the gift with reservation rules can leave it in your estate anyway. This is the most expensive myth on the list.

"Sell it to my own company at cost." Transactions between connected parties are recomputed at market value, so an undervalue sale produces the same gain as a real one. You also pay SDLT on the company purchase at the higher rates, and the company pays corporation tax on any future gain, which then has to be extracted. It converts one tax bill into three.

"Put it into a trust." Transferring into a trust is a disposal at market value. Hold-over relief may defer the gain where the transfer is immediately chargeable for inheritance tax, but deferring is not deleting: the trust takes your base cost and pays the tax later, and you have added inheritance tax entry charges, ten-year charges and exit charges to your life.

"Nominate it as my main residence now." A nomination only chooses between properties that are genuinely residences of yours. You cannot nominate a property you have never occupied, and the two-year window for making a valid nomination runs from when your combination of residences changes, not from when you decide to sell.

"Reinvest the proceeds in another property and defer the tax." There is no UK equivalent of a like-for-like exchange for residential investment property. Roll-over relief is for assets used in a trade, and a holiday home or rental is an investment, not a trade. Buying the next property changes nothing about the tax on this one.

"Letting relief will cover it." Only if you shared occupation with your tenant, which almost nobody did.

"HMRC will not know." They will. The Land Registry records the transfer, your conveyancer's anti-money-laundering reporting sits behind it, and HMRC runs data matching across property disposals as a matter of routine. Discovery assessments reach back years, and the penalty position for a deliberate failure is far worse than the tax.

One correction while we are here. If someone has told you the rate on a second home is 28%, that figure is out of date and has been since October 2024. The residential rates are 18% and 24%. Our 2026/27 rates and allowances page carries the current figures.

What if you sell the second home at a loss?

You owe no tax, and you have something worth keeping. A capital loss can be set against gains on other assets in the same tax year, and anything unused carries forward indefinitely against future gains. At 24%, a £30,000 loss is worth up to £7,200 of tax on a later sale.

The catch is that losses have to be claimed. You have four years from the end of the tax year in which the loss arose to notify HMRC, normally through your Self Assessment return. Unclaimed losses are simply lost, which is a quiet and common way to give money away.

Is UK capital gains tax on second homes the same in Scotland and Wales?

Yes. Capital gains tax is not devolved, so CGT on second homes UK-wide is one regime rather than four. A second property in Scotland, Wales or Northern Ireland is taxed at the same 18% and 24% rates as one in England, and the split between the two rates is decided by the UK basic rate limit, not by the Scottish bands you may pay income tax under. What differs by nation is the purchase tax you paid on the way in: SDLT in England and Northern Ireland, LBTT in Scotland, LTT in Wales. Whichever you paid becomes an allowable acquisition cost in your CGT calculation.

The statutory backdrop, briefly

Now that the arithmetic is done, the underlying law is short. Private Residence Relief sits at TCGA 1992 ss.222 to 226, and it is the source of both the main residence test and the final 9 months of deemed occupation. Transfers between spouses and civil partners living together are treated as made at no gain and no loss under TCGA 1992 s.58, which is why the spousal transfer above is untaxed and why your spouse inherits your base cost rather than a fresh one. HMRC's guidance on capital gains tax on property covers the filing route.

What to do before you accept an offer

Almost every lever on this page closes when contracts are exchanged. A spousal transfer has to be done before then. Occupation history has to be evidenced from records that already exist. Improvement invoices have to be found while a builder can still send you a duplicate. Even the choice of tax year is only yours while the sale is still being negotiated.

So the order that saves the most money is: work out the number, decide who should own what, then market the property. If you want that done, the form below is the place to start, and the purchase date, the purchase price and whether you ever lived there will determine most of the answer.