How much CGT do I pay on a second property?

You pay Capital Gains Tax on the profit when you sell a residential property that is not your main home. The rates are 18% for gains that fall within your basic rate band, and 24% for gains in the higher/additional rate bands (2025/26 rates). You can deduct the annual CGT exempt amount (£3,000), plus purchase costs, selling costs, and qualifying improvements. You must report and pay within 60 days of completion.

Do I pay CGT on an inherited property?

If you sell an inherited property for more than its probate value (the value at the date of death), you pay CGT on the gain — the difference between the sale price and the probate value. The probate value becomes your 'base cost', not the amount the deceased originally paid. If you lived in the inherited property as your main home for any period, you may qualify for Private Residence Relief for that period.

Can I avoid CGT by living in the property?

Your main home is exempt from CGT under Private Residence Relief (PRR). If you nominate a second property as your main residence and actually live there, it qualifies for PRR during the period of occupation. You also get relief for the last 9 months of ownership regardless of whether you lived there. However, HMRC can challenge nominations that don't reflect genuine occupation, and you can only have one main residence at a time.

Do I have to report to HMRC within 60 days?

Yes — if you sell a UK residential property and there is CGT to pay, you must report it to HMRC and pay the estimated tax within 60 days of completion (not exchange). You use HMRC's 'Report and pay Capital Gains Tax on UK property' online service. If you miss the deadline, you face a £100 late filing penalty plus interest on late payment. You still include the gain on your Self Assessment return for the year.

Capital Gains Tax on Selling a Second Home or Property UK

When you sell a property that isn’t your main home, you usually pay Capital Gains Tax on the profit. Here’s how to calculate it and how to reduce it.

CGT Rates on Residential Property (2025/26)

Your tax band	CGT rate on property
Basic rate taxpayer	18%
Higher rate taxpayer	24%
Additional rate taxpayer	24%
Annual CGT exempt amount	£3,000

Note: These rates apply specifically to residential property gains. Non-property gains (shares, crypto) are taxed at different rates (10%/20%).

Step-by-Step CGT Calculation

Step	What to calculate
1	Sale price (the amount you sell for)
2	Minus base cost (what you paid, or probate value if inherited)
3	Minus purchase costs (Stamp Duty, solicitor fees, survey on purchase)
4	Minus selling costs (estate agent fees, solicitor fees, EPC)
5	Minus qualifying improvements (extensions, new kitchen — not repairs)
6	= Total gain
7	Minus annual exempt amount (£3,000)
8	Minus any reliefs (Private Residence Relief, lettings relief)
9	= Taxable gain
10	Apply CGT rate (18% or 24% depending on your total income)

Worked Example — Selling a Buy-to-Let

Item	Amount
Sale price	£350,000
Purchase price (2015)	£220,000
Stamp Duty paid on purchase	£8,500
Solicitor fees on purchase	£1,200
Solicitor fees on sale	£1,500
Estate agent fee on sale (1.5%)	£5,250
Extension added (2018)	£25,000
New bathroom (2020)	£5,000
Total gain	£350,000 − £220,000 − £8,500 − £1,200 − £1,500 − £5,250 − £25,000 − £5,000 = £83,550
Annual exempt amount	−£3,000
Taxable gain	£80,550
CGT at 24% (higher rate)	£19,332

Worked Example — Selling an Inherited Property

Item	Amount
Probate value (value at date of death)	£280,000
Sale price (sold 18 months later)	£310,000
Solicitor fees (purchase equivalent = probate costs)	£3,000
Solicitor and agent fees on sale	£7,000
Total gain	£310,000 − £280,000 − £3,000 − £7,000 = £20,000
Annual exempt amount	−£3,000
Taxable gain	£17,000
CGT at 24%	£4,080

Key point: You don’t pay CGT on the increase from when the deceased originally bought it — only from the probate value.

What Costs Can You Deduct?

Deductible (Reduce Your Gain)

Cost	When
Original purchase price (or probate value)	Always
Stamp Duty paid on purchase	Always
Solicitor fees (purchase and sale)	Always
Estate agent fees on sale	Always
Survey costs on purchase	Always
EPC cost on sale	Always
Extensions and structural alterations	If you added to the property
New kitchen (where significant upgrade)	If it added value
Loft conversion	If you carried it out
New central heating system (where none existed)	If you added it

Not Deductible (Cannot Reduce Your Gain)

Cost	Why
Repairs and maintenance	Revenue expense — deductible from rental income, not CGT
Mortgage interest	Not a cost of the property itself
Furniture and furnishings	Not part of the property
Your own DIY labour	No value attributed
Insurance	Revenue expense
Decorating	Maintenance, not improvement

Reliefs That Can Reduce CGT

Private Residence Relief (PRR)

Detail	Information
What it does	Exempts periods where the property was your main home
How it works	Gain is apportioned by time — months occupied vs total months owned
Final period exemption	Last 9 months of ownership are always exempt (even if not living there)
Nomination	You can nominate which property is your main residence (if you own more than one) within 2 years of acquiring the second property

PRR Worked Example

Detail	Calculation
Owned for 10 years (120 months)
Lived in as main home for 3 years (36 months)
Final 9 months always exempt	9 months
Total exempt months	36 + 9 = 45 months
Total gain	£100,000
Exempt portion	45/120 × £100,000 = £37,500
Taxable portion	£100,000 − £37,500 = £62,500

Lettings Relief

Detail	Information
What it does	Reduces CGT where a property was both your home and let out
Current rules	Only applies if you shared occupation with the tenant (e.g. lodger)
Maximum relief	Lowest of: gain from letting period, £40,000, or the PRR amount
Practical impact	Very limited since April 2020 — only benefits those with live-in lodgers

Transfer Between Spouses

Detail	Information
Transfers between spouses/civil partners	No CGT — transfer at “no gain, no loss”
Separating couples	Must transfer within 3 years of separation for no-gain treatment
Strategy	Transfer to the spouse with the lower tax rate before selling

The 60-Day Reporting Rule

Detail	Information
What to report	Any UK residential property disposal where CGT is due
Deadline	60 days from completion (not exchange)
How to report	HMRC’s online service: “Report and pay Capital Gains Tax on UK property”
Payment	Due at the same time — within 60 days
Late filing penalty	£100
Still need Self Assessment?	Yes — include the gain on your tax return for the year (credit the 60-day payment)
No gain/loss-making sale	No need to report within 60 days (but still declare on tax return)

How Your Tax Band Affects CGT

Your CGT rate depends on your total income plus the gain:

Total taxable income (salary + rental + gain)	CGT rate on property
Within basic rate band (under £50,270)	18%
Above basic rate band	24%
Split across both bands	18% on the part within basic rate, 24% on the rest

Split Rate Example

Detail	Amount
Salary	£40,000
Taxable income (after Personal Allowance)	£27,430
Basic rate band remaining	£50,270 − £27,430 = £22,840
Taxable property gain	£50,000
Gain taxed at 18%	£22,840 × 18% = £4,111
Gain taxed at 24%	£27,160 × 24% = £6,518
Total CGT	£10,629

Ways to Reduce Your CGT Bill

Strategy	How it helps
Use your annual exempt amount (£3,000)	Deduct automatically
Transfer to spouse before sale	Use their CGT allowance too (£3,000 + £3,000 = £6,000)
Transfer to lower-earning spouse	They may pay 18% instead of 24%
Claim all allowable improvements	Keep receipts for extensions, renovations
Claim all purchase and sale costs	Stamp duty, solicitor fees, agent fees
Pension contributions	Reduce your taxable income, keeping more gain in the basic rate band
Timing the sale	Sell in a year when your other income is lower
Private Residence Relief	If you genuinely lived in the property for any period