Changes to Capital Gains Tax: What it means for selling your second home

The market for second home sales is shifting following the recent adjustments to Capital Gains Tax (CGT), which took effect on 6 April 2024.

These changes are particularly significant if you are considering selling additional properties, including one that you may have recently inherited or used yourself.

To help you understand these changes and your intentions to sell any additional properties you own, our legal experts have explored its impact.

Reduction in CGT rates for second homes

In a move that’s been seen as a boon for property owners, the Government has reduced the higher CGT rate on gains from the sale of second homes or additional properties.

Previously set at 28 per cent, the rate has now been lowered to 24 per cent. This reduction is aimed at easing the tax burden on sellers and could make the prospect of selling secondary properties more attractive.

Impact on the property market

This change is part of a broader strategy to encourage more property owners to sell their additional homes.

By reducing the tax rate, the Government hopes to increase the number of homes available on the market, thereby providing more buying opportunities and potentially helping to stabilise property prices.

For those looking to sell a second home, the changes may provide them with an opportunity to significantly reduce the tax costs of disposing of their property.

Strategic planning for property sales

Despite the cut in CGT rates, the Annual Exempt Amount, which allows individuals a certain level of gains without any tax implication, has also been halved from £6,000 to £3,000.

This reduction means that careful planning around the timing of your property sale becomes even more crucial.

For married couples and civil partners, the strategy of transferring property between spouses before a sale can still be beneficial.

This ‘no gain, no loss’ approach allows couples to utilise each partner’s annual exempt amount, potentially reducing the overall CGT liability.

What does this mean for you?

If you’re considering selling a second home, now might be an opportune time. The reduction in CGT rates provides a chance to maximise the amount you earn from a sale.

While the landscape of Capital Gains Tax has changed, the opportunities for selling secondary properties have potentially improved.

An essential part of any home sale is the legal process of conveyancing, so those looking to sell any additional properties should use a trusted solicitor alongside any tax advice they may be taking.

We can help you to plan future property sales strategically and ensure that you sell your home successfully.

To find out more about our residential property sale services, please contact our experienced team today.

Elizabeth Jennings

Director - Commercial Property & Charities

I joined Mander Hadley in 2004, qualified as a solicitor in 2006 and have focussed on commercial law throughout. I am also a member of Coventry and Warwickshire First and Warwickshire Law Society.