Home > Ask Our Experts > Second Home When Retire: Will we Pay Capital Gains Tax?

Second Home When Retire: Will we Pay Capital Gains Tax?

By: Garry Crystal - Updated: 17 Sep 2010 | comments*Discuss
Capital Gains Tax Cgt Second Home


My wife and I are retired. We intend to buy a retirement property near the sea and fund the purchase from savings and a legacy received recently. We will still keep our main home however (in which we have lived for 30 years), and live in it as normal but go to the house by the sea regularly.

What will happen come the time we sell our main principal home and move full time into the property by the sea? Will we get hit with Capital Gains Tax etc?

Thank you for your trouble. PaulH.
(P.H, 8 July 2009)


Having a second home has become increasingly common whether that second home is a buy to let or a holiday home. When it comes to selling a home and capital gains tax, known as CGT, the rule is that the main residence is exempt from this tax. Your main property of residence will be exempt from the tax but you will have to make sure that this home is named as your main residence when a second home is purchased.

Capital Gains Exemption

The main point of your question is that you will have two properties at the one time for a certain period of time and will be living in both on a regular basis. Living in the second home regularly could mean that this is seen as your main residence. This means that the property you have lived in for over 30 years could be hit with capital gains tax when sold. One way around this rule is to name your present property as your principle residence.

Nominating a Main Residence

Once you have purchased your second home you will have two years within which to name the property that is to be the main residence. Property owners do not have to be living in the main property at the time to name it as a main residence. If you do not register the main residence within this two year time frame you will no longer have the right to nominate. If you do not nominate then when it comes to selling you will have to prove which home was the main residence in order to avoid the capital gains tax.

Holiday Lettings Tax Relief

There are also tax relief advantages if you are intending to let out a holiday home for a period of time. A letting tax relief of £40,000 is available to owners who let out their properties for at least 140 days per year. This relief can be applied to anyone who has a share in the property. If a married couple own a second home that they let out as a holiday home then they would each be entitled to £40,000 tax relief. There are of course rules and stipulations to tax relief when letting out holiday homes.

When it comes to capital gains tax and property there are also rules that will affect the CGT exemption such as utilising part of the property as a business. Taking advice from a professional accountant will be helpful when addressing all of these issues.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

(never shown)
(never shown)
(never shown)
(never shown)
Enter word:
Latest Comments
  • Jac
    Re: Clubs to Join in Retirement
    Ive just retired and looking to meet new people for chat, lunch, reading, walking, rambling, visiting places of interest, like to…
    19 April 2019
  • Marian
    Re: Clubs to Join in Retirement
    I am 85, widow, feeling lonely, so I would like join in some social. I need transport... Can someone call me to give more…
    3 April 2019
  • Pauline
    Re: Clubs to Join in Retirement
    Recently moved to Sutton Coldfield area and would like to meet like-minded people who enjoy a chat over a coffee, a game of golf, a…
    12 March 2019
  • BJ & BJ
    Re: Clubs to Join in Retirement
    we are looking for day time socializing clubs for us both, chats entertainment, raffles of maybe donated items, some times bingo or…
    5 March 2019
  • Serenity10
    Re: Clubs to Join in Retirement
    Hi I am looking for new female friends in the Didcot area. There doesnt seem to be very much at all for over 60's. Can anyone…
    23 February 2019
  • david
    Re: Learning for Free in Retirement
    I am 88 years of age and have been left a macOS High Sierra. Can you teach me to use it correctly ?
    22 February 2019
  • david
    Re: Learning for Free in Retirement
    I am 88 years of age and have been left a macOS High Sierra and cannot use it correctly. Can you help me? Regards David…
    22 February 2019
  • Skinbase
    Re: Learning for Free in Retirement
    Are there any free classes in the Fareham Hampshire area for iPad users to learn online banking , how storage can be managed,…
    21 February 2019
  • Madge
    Re: Clubs to Join in Retirement
    Hi I am out going and enjoy life, recently widowed after a wounderfull. Marriage find I want to make new friends and live
    17 February 2019
  • Tommy
    Re: Clubs to Join in Retirement
    I work on "Jeremy Vine" on Channel 5 and I'm looking to reach out to Retirement communities to ask if anyone would like to come to…
    15 February 2019