Sell Your Second Home Without Losing a Fortune to Capital Gains Tax

Selling a second property can be financially rewarding — but many owners and landlords are caught off guard by the Capital Gains Tax bill that follows.

Because it’s not your main home, different rules apply, and the calculation isn’t always as straightforward as people expect. Before you agree to a sale price, it’s crucial to understand how CGT is worked out and what it could mean for your final profit.

CGT: How to Protect Your Pounds

What You Need to Know

Selling a second property can feel like a great financial move — until you get hit with Capital Gains Tax that wipes out a big chunk of your profit. The good news is that understanding how CGT is calculated doesn’t need to be complicated. CGT is essentially a tax on the profit you make when you sell an asset, and with property that isn’t your main home, the rules are strict.

First, you work out your gain by subtracting what you originally paid for the property from what you sell it for. But it’s not just the purchase price you consider — you can also deduct certain costs, like professional fees (solicitors, estate agents) and qualifying improvements you made to the property.

Once you have your net gain, you then take away your annual CGT allowance — this is a tax-free amount everyone gets each year. Anything above that allowance is taxed, and for property the rates are higher than on other assets: landlords typically pay 18% or 28% depending on their total income and the size of the gain. Most sellers are surprised by this because unlike selling your main home, you don’t get the same generous reliefs. The result is often a much larger bill than expected.

Even more importantly, there are timing and reporting rules; in the UK, for example, you must report and pay the CGT within a set period after the sale completes — missing this deadline can cost you penalties and interest. Many sellers also overlook opportunities to reduce their bill, such as transferring ownership with a spouse or utilising losses from previous years.

That’s where getting professional CGT support can make a real difference — identifying every deduction available to you and ensuring your return is accurate and filed on time. If you’re planning to sell your second property and want to know exactly what your CGT will be, or how to reduce it legally, get in touch for a personalised calculation and expert guidance.

Don’t let confusion cost you thousands.

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Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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