Selling a Second Property? Here’s How Much Capital Gains Tax You Could Pay

Selling a second home, buy-to-let property or investment property can be a significant financial decision. But before you complete the sale, there is another figure you need to think about: Capital Gains Tax (CGT). Depending on your circumstances, a property sale could leave you with a substantial tax bill. The good news is that the amount of CGT you pay is not simply based on the difference between what you bought the property for and what you sell it for. There are a number of factors, costs and potential reliefs that need to be considered.

How is Capital Gains Tax calculated when selling a property?

In simple terms, you start by calculating the gain you have made on the property.

For example:

• Sale price: £500,000

• Original purchase price: £300,000

• Initial gain: £200,000

• However, that does not necessarily mean you will pay CGT on the full £200,000.

Certain qualifying costs can be deducted, including some costs of buying and selling the property and qualifying improvement costs. HMRC confirms that costs such as estate agent and solicitor fees may be deductible, as can certain improvement works. You may also be entitled to tax relief depending on how the property has been used.

What is the Capital Gains Tax rate on property?

For individuals, the main CGT rates for gains arising from 6 April 2026 are 18% and 24%, depending on your taxable income and circumstances.

The Annual Exempt Amount for individuals is currently £3,000 for the 2026/27 tax year.

So, if you are selling a property with a substantial gain, the tax bill can quickly become significant.

Selling a Second Property? The Tax Bill Could Be Bigger Than You Think…

Potentially. However, this is where getting professional advice before selling can be particularly valuable.

Depending on your circumstances, you may need to consider:

• Whether the property has ever been your main residence

• Private Residence Relief

• Whether any Letting Relief could apply

• Allowable purchase, sale and improvement costs

• Capital losses

• Your taxable income for the year

• The timing of the disposal

• Joint ownership

• Previous transfers of the property

• Your wider tax position

The rules can become particularly complicated where a property has been used as both a home and an investment.

What if I am selling a buy-to-let property?

Buy-to-let properties are a common source of CGT liabilities. If you bought a property for £250,000 and later sell it for £450,000, for example, you may have a gain of £200,000 before taking account of allowable costs, losses and reliefs. That does not mean your CGT bill will automatically be 24% of £200,000.

Your income, available annual exemption, allowable deductions and the specific circumstances surrounding the property all need to be considered. There is also an important 60-day deadline

If you are selling UK residential property and CGT is due, you generally need to report the disposal and pay the tax within 60 days of completion. This is such an important deadline to be aware of and leaving the calculation until your Self Assessment deadline could be too late. And if you are a non-UK resident selling UK property, there are additional reporting requirements. HMRC states that non-residents must report disposals of UK property or land, even where there is no tax to pay.

Can I Reduce the Capital Gains Tax I Pay?

If you’re expecting to make a significant gain on a property, getting professional tax advice before you sell could be one of the most important steps you take. It can be tempting to work out the CGT yourself after the sale has completed. But by then, it may be too late to consider certain planning opportunities. Every property transaction is different. Whether you’re selling a second home, buy-to-let, holiday home or investment property, the tax position can depend on how and when you acquired the property, how it has been used, the costs you’ve incurred and your wider financial circumstances.

This is where professional advice can make a real difference.

At The Tax Faculty, we specialise in complex tax matters, including Capital Gains Tax and property transactions. We can help you understand your position before you make the sale, including:

✔️ How much CGT you could potentially pay

✔️ Which costs and reliefs may be available to you

✔️ Whether there are legitimate tax planning opportunities to consider

✔️ How the timing of the sale could affect your tax position

✔️ What your reporting and payment obligations will be

✔️ What needs to happen once the property has been sold

Don't wait until HMRC is asking questions. If you're considering selling a property and expect to make a gain, speak to a tax specialist before you sell — not afterwards. A conversation with a professional adviser could help you understand your potential liability, avoid costly mistakes and make sure you know exactly what you're getting into before the transaction takes place.

📞 Thinking about selling a property? Talk to The Tax Faculty first.

We can help you understand the tax implications and give you the professional advice you need to make an informed decision. Getting the right advice before you sell could save you considerably more than the cost of getting that advice. Tax rules can change and individual circumstances vary. This article is for general information only and should not be treated as personal tax advice.

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Why Professional Tax Advice Before Selling Could Save You Money

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

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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