Capital gains tax on second properties

Selling a residential property that is not your main home triggers a separate reporting obligation with a short deadline, distinct from the annual self assessment return. Missing it brings penalties even where the tax itself is paid.

The gain is not simply sale price less purchase price. Buying and selling costs, improvement expenditure and any period of occupation as a main residence all affect the figure, and the records supporting them are often decades old.

The time to look at this is before contracts are exchanged, when ownership, timing and the use of allowances can still be arranged sensibly between spouses or civil partners.

Points to note

• A standalone return and payment are due shortly after completion
• Improvement costs reduce the gain — legal and agent fees too
• Private residence relief may cover part of the ownership period
• Transfers between spouses before sale can use both allowances
• Gather purchase and improvement paperwork early