Last updated: 16 October 2026
Do you pay capital gains tax when you sell a first or second property?
Selling your only or main home is usually free of capital gains tax thanks to private residence relief. Selling a second property, such as a buy-to-let or holiday home, usually means CGT on the gain, at 18% for gains within your basic rate band and 24% above it in 2026/27. If you’ve owned two homes at once, you can nominate which one is your main residence within two years of acquiring the second, which can save tax on whichever you expect to gain most.
Main home versus second property
| Property | CGT position |
| Only home, lived in throughout | Exempt |
| Former main home, later let | Partly exempt; last 9 months always exempt |
| Second home or holiday home | Taxable unless nominated as main residence |
| Buy-to-let never lived in | Fully taxable |
Annual exempt amount
The first £3,000 of gains each tax year is tax-free. Couples who own jointly each have an allowance.
Reporting and paying
You must report and pay CGT on a UK residential property within 60 days of completion using HMRC’s online service. You also include the gain on your Self Assessment return if you file one.
Nominating a main residence
If you have two homes you live in, you can choose which is your main residence for CGT. The election must be made within two years of the date you start living in the second home. Without an election, HMRC decides based on facts such as where you spend most time and where your family lives.
Example
Kate bought a flat for £200,000 in 2014 and lived there until 2019, then moved into a house and let the flat. She sells the flat in 2026 for £320,000. The gain is £120,000. She owned it for 12 years and lived there for 5 years, plus the final 9 months is exempt, so about 5.75 / 12 of the gain is relieved: £57,500. The taxable gain is £62,500, less the £3,000 allowance, so £59,500 is taxed at 18% or 24%.
Deductible costs
- Stamp duty and legal fees on purchase
- Improvement costs, such as an extension
- Estate agent and legal fees on sale
Repairs and running costs aren’t deductible for CGT.
Common mistakes
- Missing the 60-day deadline
- Forgetting to nominate a main residence
- Claiming repairs as improvements
- Overlooking letting relief restrictions since 2020
Records to keep
Keep completion statements, invoices for improvements and evidence of when you lived in the property.
Losses
If you sell a second property at a loss, report it to HMRC within four years so you can set it against other gains in the same or later years. Losses on your main home aren’t allowable, as gains on it would be exempt.
Moving abroad before selling
Non-residents still pay UK CGT on UK property and must report within 60 days even if no tax is due.
Frequently asked questions
Can a married couple have two main residences?
No, only one between them.
Does lettings relief still apply?
Only if you shared occupation with the tenant.
Do I pay CGT on inherited property?
Only on the gain since death.
Can I transfer to my spouse first?
Yes, at no gain no loss, which can use both allowances.
Related: main residence may not be tax-free, how long to live in a property and the CGT reporting deadline.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with second property CGT advice. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
