Selling a second home or buy-to-let, what’s different?

The Cedar Crest Team
Aug 25
5 min read

If you’re not selling your primary residence, here’s what to expect on tax, timing, and tenant rules

Selling a second home or buy-to-let, what’s different?

Whether offloading a buy-to-let property or selling a seldom-used second home, the process differs from selling your primary residence. There are various tax regulations, extended timelines, and often, added complexities. That’s not to say it’s difficult, but it is crucial to understand what you are getting into.

From Capital Gains Tax to managing tenants and evidencing property usage, selling a second property involves various decision-making processes. This article examines the unique challenges and key steps involved in selling a second home or investment property in the UK, helping you to avoid pitfalls and remain compliant with HM Revenue & Customs, your lender, and the law.

FIRST, DEFINE THE PROPERTY’S STATUS

Not all second properties are alike, and how you utilise the home will influence your sale process.

You might be selling:

• A holiday home or weekend residence

• A buy-to-let investment property (with or without tenants)

• A former primary residence that you’ve kept after moving elsewhere

• A gifted or inherited property you never lived in

In all these cases, the sale will not qualify for the usual tax exemption on your principal residence, meaning that Capital Gains Tax (CGT) may apply if you have made a profit.

UNDERSTAND THE CAPITAL GAINS TAX (CGT) IMPLICATIONS

When you sell a second property for more than you paid for it, you may owe CGT on the profit. This applies to both UK residents and overseas sellers of UK property. Since 30 October 2024, the rates of CGT on property have been the same as on other assets. Bear in mind that any capital gains will be added to your other income sources when calculating which income tax bracket you’ll fall into for the year, and might therefore push you into a higher bracket.

As of 2025, the CGT regulations are as follows:

• Basic-rate taxpayers pay 18% on gains

• Higher or additional-rate taxpayers pay 24% on gains

• Everyone gets a £3,000 annual CGT allowance (as of tax year 2025/26)

• Couples who jointly own assets can combine this allowance, potentially allowing a gain of £6,000 without paying any CGT

You must report the sale and pay any CGT within 60 days of completion by using the online HMRC “Report and Pay CGT” service.

Allowable costs that can reduce your taxable gain include:

• Stamp duty and legal fees when you bought the property

• Estate agent and solicitor fees when you sell

• Capital improvements (e.g. extensions or loft conversions, not repairs)

You cannot carry forward any unused CGT allowance into the next tax year. If you don’t utilise it, you’ll lose it. However, you can carry forward reported capital losses. If you have lived in the property as your main home in the past, you might be eligible for Private Residence Relief for the years you occupied it. Consult a tax adviser to confirm.

WHAT IF THE PROPERTY IS TENANTED?

Selling a buy-to-let property with tenants remaining introduces an extra layer of complexity. You have two primary options:

1. Sell with tenants in situ

This could attract other landlords, particularly if the tenants are dependable and the rental yield is high. The process is easier for tenants, but it might restrict your potential buyers to investors only.

2. Vacate the property before selling

This opens the sale to owner-occupiers, often the largest segment of the market. However, it requires providing proper notice in accordance with the current tenancy agreement and UK law.

From 2025, if your tenants are on a rolling periodic tenancy or an AST (Assured Shorthold Tenancy), you must give at least two months’ notice through a Section 21 unless legislation changes depending on the results of the Renters Reform Bill. Please be aware that if the tenant does not vacate by the expiry date of the notice, you may need to begin possession proceedings, which could delay your timeline.

MORTGAGE AND FINANCE CONSIDERATIONS

If you still have a mortgage on the property, especially a buy-to-let mortgage, notify your lender when you decide to sell. Depending on your product, there may be early repayment charges (ERCs), exit fees, or timing restrictions. Lenders typically:

• Require redemption figures shortly before completion

• Release the charge on the property once the loan is repaid

• Adjust interest if you overpay or redeem early If the mortgage is interest-only, include the full repayment sum when calculating net proceeds.

CAN YOU OFFSET LOSSES OR REINVEST?

If you have sold another asset at a loss (e.g., another property or shares), you might be able to offset that loss against your gains. Similarly, if you sell the second property and reinvest in other buy-to-let assets, you can structure your portfolio in a tax-efficient manner through a limited company. However, this requires careful planning and advice from a specialist accountant or property tax adviser.

SHOULD YOU RENOVATE BEFORE SALE?

This depends on the buyer you are targeting. If you are selling to another landlord, they may prefer to modernise themselves. However, if you are aiming to attract owner occupiers or increase market value, modest upgrades such as new carpets, fresh paint, and a clean kitchen and bathroom can make a significant difference. Remember that extensive renovations can delay sales and might not significantly boost your net profit once CGT is taken into account.

TIMING MATTERS, ESPECIALLY FOR TAX YEAR PLANNING

If you are nearing the end of the tax year (April 5th), consider how the sale date could affect your annual CGT allowance and tax bill. Selling before the tax year resets allows you to utilise that year’s allowance. Delaying until after 6 April lets you defer the gain to the next tax cycle. If you co-own the property with a spouse or partner, you can split the sale proceeds and make use of two CGT allowances; this is another reason to seek advice from a tax professional.

WHAT ABOUT SELLING A PROPERTY ABROAD?

If you are selling a second home outside the UK and are a UK tax resident, you may still be liable for UK CGT in addition to local taxes in the country where the property is located. You should include this in your self assessment and verify any relevant double taxation agreements (treaties between two countries designed to prevent individuals and businesses from being taxed on the same income in both jurisdictions).

SECOND-HOME SALES NEED SHARPER PLANNING

Selling a second property is often a strategic choice, whether you are leaving the rental market, reducing your portfolio, or parting with a holiday home that no longer suits your needs. However, unlike primary home sales, second properties involve extra regulations. From tax reporting to tenant management, every stage requires careful timing, proper documentation, and a clear understanding of your financial objectives. If managed effectively, you can maximise your returns and progress smoothly, without any last-minute surprises.