Guide

Capital Gains Tax on a Second Home 2026/27

Selling a second home, holiday home or investment property that is not your main residence can trigger a significant capital gains tax bill. Because Private Residence Relief does not apply, the full gain is exposed to CGT — and you must report and pay within 60 days of completion. This guide explains the 2026/27 rules in full.

Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.

Why Private Residence Relief does not apply

Private Residence Relief (PRR) can exempt all or most of the gain on your main home from CGT. For a second home or investment property, PRR does not apply unless you genuinely occupied that property as your only or main residence at some point.

If you did live there as your main home for part of the ownership period, you may be able to claim PRR on the proportion of time the property was your main residence, plus the final 9 months of ownership automatically (reduced from 18 months in April 2020). Any remaining period outside those windows is a chargeable gain.

For a property that was never your main residence — such as a pure buy-to-let or a holiday cottage rented to guests — PRR does not apply at all.

Letting Relief — very limited since April 2020

Before April 2020, Letting Relief could reduce a CGT bill by up to £40,000. Since April 2020 it only applies where the owner was in shared occupancy with their tenants. For most landlords and holiday let owners who were not living in the property at the same time as tenants, Letting Relief is no longer available.

2026/27 CGT rates for residential property

18% on gains falling within your remaining basic-rate band (income plus gain up to £50,270 after personal allowance)
24% on gains above the basic-rate band
Annual exempt amount: £3,000 per individual per tax year

Allowable costs you can deduct

The following costs reduce the gain:

Purchase price and Stamp Duty Land Tax paid when you bought
Solicitor/conveyancing fees on purchase and sale
Estate agent fees on the sale
Costs of capital improvement works (extensions, renovations — not routine repairs or maintenance)
Surveyor fees on purchase

You cannot deduct mortgage interest, letting agent management fees, insurance or other running costs — those may have been claimed as income tax deductions while the property was let.

Worked example

James bought a holiday cottage in 2015 for £180,000 (including Stamp Duty and solicitor fees). He sells in 2026 for £260,000, paying estate agent and solicitor fees of £5,000. He spent £2,500 on a kitchen extension (capital improvement). His taxable income for the year is £60,000, so all gains are at the higher rate.

Sale proceeds£260,000 Minus purchase cost−£180,000 Minus selling costs−£5,000 Minus capital improvement−£2,500 Gross gain£72,500 Minus annual exempt amount−£3,000 Taxable gain£69,500 CGT at 24%£16,680

James must file and pay £16,680 to HMRC within 60 days of the completion date using HMRC's online property reporting service.

The 60-day reporting and payment rule

Since October 2021, if you sell a UK residential property and a CGT liability arises, you must:

Report the disposal to HMRC within 60 days of the completion date
Pay any CGT due within the same 60-day window

Use HMRC's UK Property Reporting Service (accessed through your Government Gateway account). If you also file a Self Assessment return, you will need to include the property disposal there too — but the 60-day payment counts as an advance payment against your Self Assessment bill.

Penalties apply for late reporting, starting at £100 for being up to 6 months late, rising further if the delay continues.

Estimate your CGT on a second home

Enter your purchase cost, sale proceeds and selling costs to get a 2026/27 CGT estimate in seconds.

Open the CGT calculator

Official sources

Frequently asked questions

Do I pay CGT on a holiday home?

Yes. A holiday home or short-term let property is treated as a second home for CGT purposes. Because it is not your main residence, Private Residence Relief does not apply. Any gain above the £3,000 annual exempt amount is taxable at 18% or 24% depending on your income level, and you must report and pay within 60 days of completion.

What is the 60-day rule for CGT?

Since October 2021, anyone selling a UK residential property with a CGT liability must report the sale and pay the tax due to HMRC within 60 days of the completion date. This is done via the HMRC UK Property Reporting Service online. Missing the deadline triggers a £100 penalty (rising if further delayed) and interest on the unpaid tax.

Can I avoid CGT by making the property my main home before selling?

You can nominate a property as your main residence, which may qualify it for Private Residence Relief. However, the nomination must be genuine — you must actually live there. HMRC scrutinises cases where a property is suddenly nominated as a main home shortly before sale. Any period during which the property was not your main residence (excluding the automatic final 9-month window) will remain chargeable to CGT.

Can I deduct mortgage interest or renovation costs?

Mortgage interest is not an allowable deduction against CGT (it may have been an income tax deduction during a let period). However, capital improvement costs — such as extensions or structural renovations that enhance the property — can be deducted. Routine maintenance and repairs are not allowable for CGT purposes.

What if I own the second home jointly with my spouse?

Each co-owner calculates CGT on their own share of the gain. In a 50/50 joint ownership, each person has a gain of half the total. Each can use their own £3,000 annual exempt amount, and each may be in a different income tax band. Transfers of ownership between spouses or civil partners before a sale can be used to utilise both partners' exempt amounts and potentially lower-rate bands.

This page is for general information only and is not financial, tax or legal advice. CGT rules are complex and your circumstances may differ. Consult a qualified tax adviser or accountant before making decisions about a property disposal.