Selling a second home in the UK can be a bold financial move, and is great if you’re realising investment gains, making changes lifestyle or preparing for retirement. But it’s not quite as simple as selling your main residence.
Second homes are subject to additional tax rules and legal obligations, and without proper planning, you could end up paying more than you need to.
In this guide, we’ll run through everything you need to know about selling a second home in 2025.
The key points we’ll cover include:
- Selling a second home in the UK involves understanding additional tax rules and legal obligations compared to selling a primary residence.
- Capital Gains Tax (CGT) significantly impacts the profitability of selling a second property, with specific allowances and reliefs potentially available.
- Proper planning and consulting with tax and legal experts can help reduce tax liabilities and streamline the selling process.
- If you need to sell your second home in a short timeframe, you can sell your second home quickly through Zapperty.
What Is Considered a Second Home in the UK?
A second home is any residential property you own in addition to your primary residence, aka, the home you currently live in. This might be a holiday home, a buy-to-let property or a house you’ve inherited but don’t live in full-time.
HMRC defines your main home as the property where you spend most of your time. You can only have one primary residence for tax purposes, and any other residential properties will be treated as secondary homes.
Even if you stay in your second home fairly regularly, it won’t qualify for the same tax reliefs as your main home. This includes if you split your time 50/50 between the two – only one property can count as your primary residence. This classification affects your liability for Capital Gains Tax (CGT) when you sell.
For official guidance, refer to HMRC’s definition of a main residence.
Reasons for Selling a Second Home
There are many personal and financial reasons people choose to sell a second home:
- Market timing: If property prices are high, selling may help you lock in returns on your investment.
- Lifestyle changes: You might no longer need the extra space or want to simplify your finances.
- Tax planning: Selling a second property can help optimise your overall tax position, especially near the end of a tax year.
- Divorce or inheritance: Second homes inherited or acquired through divorce are often sold to split assets or reduce tax exposure.
Tax Implications When Selling a Second Home in the UK
Selling a second property in the UK is not as straightforward as selling your main residence, especially from a tax point of view. One of the most important considerations is Capital Gains Tax, a tax on the profit you make when your property has increased in value. Unlike your main home, second homes are not usually eligible for full tax relief, meaning CGT can take a significant portion.
Understanding Capital Gains Tax
When you sell a second home, you pay CGT on the gain, which is the difference between the price you paid and the price you sell for, minus any allowable costs (like legal fees or certain improvements). You don’t pay CGT on the entire sale amount, only the profit. This is the good news. The bad news is that you have to pay tax at all.
For the 2024/25 tax year, every individual has a £3,000 CGT allowance. This means the first £3,000 of your gain is tax-free. Any remaining gain is then taxed at 18% for basic rate taxpayers or 28% for higher and additional rate taxpayers. Your income level for the year will determine which rate applies.
For example, if you purchased a second home for £200,000 and later sell it for £300,000, your total gain is £100,000. After deducting the £3,000 allowance, the taxable gain becomes £97,000. Depending on your income bracket, this could result in a CGT bill of over £27,000.
What Reliefs Are Available?
Second homes generally don’t qualify for Private Residence Relief, which only applies when selling your main home. However, if the property was once your primary residence, or if you rented it out, you may be eligible for partial relief.
Lettings Relief is one such option, though its scope has been massively reduced since 2020. It now only applies in cases where the owner lived in the property at the same time as the tenants. Even when applicable, the relief is capped and typically only reduces your CGT liability by a small amount.
If you’re unsure about eligibility, it’s worth speaking to a qualified tax advisor before selling.
Reporting to HMRC
If you make a profit on your second home sale, HMRC requires you to report and pay your CGT within 60 days of the completion date. This must be done through the online UK Property Account.
If you don’t pay within this window, it can lead to penalties and interest charges, so make it a priority as soon as the sale goes through. This applies even if you’ve already submitted a Self Assessment tax return, as second home sales must be reported separately.
To find out more, read our article that answers how much tax do you pay when you sell your house?
Inheritance or Gifted Second Homes
Tax implications also apply when second homes are inherited or gifted. If you inherit a second home, it may fall under Inheritance Tax (IHT) if the estate’s value exceeds the inheritance tax threshold. The recipient may also face CGT when they eventually sell the property, with the gain calculated from the market value at the time of inheritance.
If you gift a second property, it’s treated as a disposal for CGT purposes. This means the tax is based on the property’s market value at the time of the gift, not the amount received (even if it’s zero). Depending on the circumstances, this could trigger a significant CGT liability for the giver.
Legal Steps Involved in Selling a Second Home
Selling a second home in the UK involves many of the same legal procedures as selling your primary residence, but there are a few extra things to think about, especially if it’s a holiday let or rental.
1. Hire a Solicitor or Conveyancer
First, you’ll need to instruct a solicitor or conveyancer to handle the legal side of the sale. They’ll take care of the transfer of ownership, manage all contractual paperwork and ensure that the sale complies with relevant regulations.
One of the first things they’ll do is review the title deeds and carry out property searches. These steps confirm that you’re the legal owner of the property and that there are no disputes, restrictions or charges attached to it that could affect the sale. Ensuring a clean legal title helps prevent delays or complications once a buyer is found.
2. Provide an Energy Performance Certificate
You’re required to provide an Energy Performance Certificate (EPC) when selling a property in the UK. This gives prospective buyers an idea of the property’s energy efficiency and must be made available within seven days of putting the home on the market.
3. Rental Property or Holiday Let
If your second home has been used as a rental property or holiday let, there are a few additional things to bear in mind.
You may need to give notice to tenants as per tenancy law before proceeding with the sale. For short-term or holiday lets, it’s important to clarify whether any bookings are scheduled or contracts in place that the new owner would need to honour. In either case, your solicitor may also request documentation relating to rental income or occupancy history, as this can affect both the legal disclosures and tax implications of the sale.
Being organised and transparent at this stage can help the transaction progress smoothly and reduce the risk of issues arising during conveyancing or due diligence on the buyer’s side.
Do You Need to Pay Stamp Duty Again?
You don’t pay Stamp Duty when selling a property, but if you’re buying another property after selling your second home, you might face the Stamp Duty Land Tax (SDLT) 3% surcharge for second properties.
However, if the second property replaces your main residence and you sell the old one within three years, you may qualify for a refund.
Buying a Second Home Without Selling the First
If you’re considering buying a second home without selling the first, you should be aware of the financial implications:
- Mortgage affordability: You must prove to lenders that you can afford both properties.
- Bridging loans: Short-term finance options can help you buy before you sell.
- Let-to-buy: You may rent out your first home and use the rental income to qualify for a second mortgage.
Learn more by reading our guide to buying a second home without selling the first.
How to Minimise Taxes When Selling a Second Home
When you sell a second home, you can’t avoid the need to pay Capital Gains Tax, but there are legal ways to reduce what you owe. With some planning, you can take advantage of allowances, tax rules and ownership strategies that can significantly reduce your tax liability. Here are some of the most effective methods:
Sell in a low-income year
CGT is calculated based on your total income. If you sell your second home during a year when your income is lower, such as after retirement or during a career break, you may remain within the basic rate tax band. If that’s the case, you’ll pay 18% CGT rather than the higher 28%.
Transfer ownership to your spouse or civil partner
Transfers between spouses and civil partners are tax-free. By giving them part or all of the property before selling, you can double your annual CGT allowance (from £3,000 to £6,000 for 2024/25), and potentially keep more of the gain taxed at the lower CGT rate if their income is lower.
Claim all allowable costs and expenses
You can deduct certain costs from your gain to reduce your CGT bill. These include stamp duty paid when you bought the property, legal and estate agent fees when selling and the cost of capital improvements such as extensions or new kitchens.
Work with a qualified property tax advisor
Tax rules can be complex, especially if you’ve let the property or made significant changes over time. An experienced accountant or property tax specialist can help structure the sale in a way that legally reduces your CGT liability and ensures you meet all reporting deadlines.
Selling a Holiday Home vs an Investment Property
Not all second homes are considered the same when it comes to tax. The way your property has been used, such as whether it’s a furnished holiday let (FHL) or a traditional buy-to-let (BTL) investment, can affect your tax obligations.
Holiday Homes
Holiday homes that qualify as Furnished Holiday Lets (FHLs) may benefit from specific tax advantages. If your property meets the criteria, such as being available for short-term letting for at least 210 days a year and was let for at least 105 days, it may be classed as a business rather than a personal investment.
This allows you to claim business reliefs like capital allowances on furniture and fittings, which can reduce your taxable profits. Additionally, when selling an FHL, you may qualify for Business Asset Disposal Relief, potentially lowering your Capital Gains Tax rate to 10%.
Read HMRC’s guidelines on holiday homes for up-to-date information.
Buy-to-Let Properties
Buy-to-let properties are treated purely as income-generating investments. The rental income is taxed as personal income, subject to income tax at your applicable rate. You can’t claim capital allowances and the range of deductions available is smaller. When it comes to selling a BTL property, full Capital Gains Tax applies at the standard rates of 18% or 28%, depending on your income level.
The Difference
The key difference between the two boils down to how HMRC classifies the income. FHL income is often treated as business income, whereas BTL income is taxed as property income, making FHLs more tax-efficient in certain scenarios, especially if you plan to sell.
If you’re not sure which category your property falls into or you’ve used the property in different ways, it’s worth speaking with an advisor to clarify your position. They’ll also be able to point you in the direction of any reliefs that may be available.
Tips to Sell Your Second Home Faster
- Work with a knowledgeable local agent: A local estate agent will have insight into area trends, typical buyer profiles and the best way to market your property to attract serious interest. It can be tempting to use online agents, which are often cheaper, but they lack the local knowledge and that human touch.
- Stage the property for impact: Present the home as clean, uncluttered and welcoming. Use neutral decor and well-placed furnishings to help buyers imagine themselves living there or renting it out.
- Set a competitive, well-researched price: Research recent sales of comparable homes in the area. Consider your property’s condition, upgrades and market demand to avoid pricing too high or too low.
- Use investor-friendly marketing language: Highlight features that appeal to buyers looking for income potential. Phrases like ‘investment-ready,’ ‘strong rental yield,’ or ‘development opportunity’ can attract interest from landlords and developers.
Need a faster sale? Sell your house fast with Zapperty.
Sell Your Second Home Fast
Selling a second home in the UK comes with added responsibilities, especially around tax and legal compliance. From Capital Gains Tax to the conveyancing process, careful planning can help you avoid costly mistakes and unlock more value from your sale.
Key takeaways:
- Selling strategies for second homes may vary based on their use as holiday lets or buy-to-let properties, affecting tax implications and available reliefs.
- Effectively marketing and pricing your property, along with working with a knowledgeable local agent, can expedite the sale process.
Before listing your property, it’s wise to consult a property tax advisor or legal expert. If speed is a priority, services like Zapperty can help you sell your home quickly and efficiently.
Selling a Second Home FAQs
Do you pay tax when you sell your second home in the UK?
Yes. You will likely need to pay Capital Gains Tax on any profit made from the sale of a second home.
How much capital gains tax will you pay on a second property?
You’ll pay 18% (basic rate) or 28% (higher rate) on gains above the £3,000 annual allowance. The exact amount depends on your income level and the size of the gain.
Can you avoid paying tax on a second home sale?
While CGT is usually unavoidable, you can reduce it by timing the sale, using spousal allowances, and claiming improvement expenses.
How do you report capital gains tax to HMRC?
You must report and pay CGT within 60 days of the sale using HMRC’s online system.
Is a holiday home considered a second home?
Yes. HMRC treats any property that isn’t your main residence as a second home, including holiday properties.
What is the 36-month rule for capital gains?
This rule allows the final 9 months (formerly 36) of ownership to be treated as if you lived in the property, but it usually only applies to your main residence.
How long do you need to live in a second home to avoid CGT?
You must live in the home as your primary residence and nominate it as such to HMRC. The longer you live there, the more relief you may receive.
Can you gift my second home to a family member without paying tax?
Gifting may still trigger CGT based on market value at the time of the gift. It could also lead to Inheritance Tax if you pass away within 7 years.
