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  • Writer's pictureRyan Witter

Understanding Second Home Tax: What You Need to Know

Thinking of buying a second home but want to know if you have to pay second home tax? Look no further.

Whether it’s a holiday home or a long-term investment property, you will most likely have to pay second home tax.

The tax implications may differ from your main residence, which is why it can be a little confusing – but don’t worry, we’ll break it down for you!




Which properties are liable for second home tax? You will have to pay tax on most second homes, regardless of what it is used for or how you came to own it. As long as it is not your main residence, it will most likely qualify for second home tax – this includes;

  • Buy-to-let properties

  • Long-term investment properties

  • Holiday homes

  • Short-term/seasonal lets such as an Airbnb

So what taxes exactly do I have to pay on a second home?

There are four different types of taxes you may be liable to pay (pretty steep, we know). Some are dependent on what your second home is used for.

Stamp Duty Land Tax In the U.K, the most common tax implication when buying a home is Stamp Duty. The amount you pay is calculated by the value of the property.

Council Tax

Council Tax is another tax that you may have to pay on your second home. Luckily, some councils offer discounts on second homes if you don’t live there all year round. This varies from council to council, so be sure to check with them directly! You can find contact details for your local council here.

Income Tax If you rent out your second home, you will have to pay Income Tax. How much tax you pay depends on how much profit you gain from your rental property, as well as any other income.

Capital Gains Tax You will only pay CGT if you decide to sell your property. The profit you make from this sale will be taxed in line with the rest of your income. If you make under £12,300 profit from your sale, you won’t have to pay CGT as this falls within the capital gains tax allowance.

Are there any properties that aren’t subject to second home tax? Not all second homes will incur second home tax. For example, you can dodge stamp duty (legally, of course) or you may even be entitled to a stamp duty refund if:

  • Your second home is mobile, e.g. a caravan or boat

  • Your second home is worth less than £40,000

  • You sell your main residence within three years of buying your second home

Can you have two main residences to avoid second home tax?

A person can only have one main residence. For tax purposes, married couples and civil partners who live together can also only have one main residence.

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