Buying or Selling a second home?

News at Musker McIntyre | 03/05/2019

What you need to know 

Over the past few years, the Government has introduced a number of new rules and regulations regarding the buying and selling of second homes. Designed to even the playing field and make it easier for first time buyers and local residents to get on the property ladder, these new fees and taxes are having a significant impact on the second home market.

If you’re thinking about buying a holiday home or a rental property, or if you’re planning to sell a second home you’ve owned for a number of years, you need to be aware of the latest changes if you’re going to make the most of your investment.

Additional stamp duty on second homes


Since April 2016, those wanting to buy second properties in the UK have had to pay an additional stamp duty on their purchase. This is true whether you’re buying a property to rent out or a place to use as a holiday home.

Since the new rates were introduced, second homebuyers have been required to pay 3% more in stamp duty than those buying their primary residence. This means that second homeowners have to pay 3% on the first £125,000 of the purchase price, 5% on the value between £125,000 and £250,000, 8% on the amount they pay from £250,000 to £925,000 and 13% on anything between £925,000 and £1.5m. If buyers are purchasing properties worth over £1.5m, they’ll be asked to pay 15% on the amount they spend over that value.

When setting the budget for your second home purchase, and negotiating a purchase price, it’s important to bear these higher SDLT rates in mind. If you don’t take them into account, you may end up putting unnecessary pressure on your finances.

Capital gains

If you end up selling your second home for a profit, you’ll need to pay capital gains tax on the money you make. The amount you pay will depend on your income and on the amount of profit you make. At the moment, basic rate income tax payers are liable to pay 10% in capital gains tax while those on higher rates of income tax pay 20%.

It’s important to remember that you only pay tax on the profit you make from the sale of your second property. This means that, if you bought the property for £200,000 and sold it for £250,000, you’d pay capital gains on £50,000. You can also deduct estate agents fees, stamp duty and other selling costs from your profits before paying capital gains tax to minimise the amount you’re liable for.

When buying and selling second homes, there are certain fees and taxes that need to be taken into account. To find out more about the process, or to start looking for your dream holiday property, get in touch with a member of our team today.