Let-to-Buy Tax Implications: SDLT, CGT and Section 24
Last updated 29 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
Let-to-buy — keeping your current home, letting it out and buying a new one to live in — turns you into a landlord with two properties. Expect the 5% stamp duty surcharge on your new home (with no refund, because you didn’t sell the old one), Section 24 mortgage-interest restriction on the let property, and a partly taxable gain when you eventually sell the property you used to live in.
Let-to-buy is popular with people who can’t sell quickly, want to keep a property they’re fond of, or fancy becoming an “accidental landlord”. It can work well — but the tax bill is meaningfully heavier than a straightforward house move, and the costs arrive at three different points.
This guide breaks down each one for the 2026/27 tax year. For the calculations on the new purchase, see our buy-to-let stamp duty calculator.
Free calculator · no sign-up
Let-to-Buy SDLT Calculator 2026
Estimate the stamp duty on your new home — including the 5% higher-rate surcharge for owning two properties.
Result
- SDLT (standard)
- £5,000
- SDLT (additional property, +5%)
- £20,000
- Extra paid as a landlord
- £15,000
England & NI only. 5% surcharge applies because you keep the old home. Scotland/Wales differ. Estimate only.
1. Stamp duty: the 5% surcharge you can’t reclaim
When you buy your new home, you’ll own two or more residential properties at the end of the transaction. Because you’re keeping the old one (not replacing your main residence), the 5% higher-rate SDLT surcharge applies on the whole price of the new home — on top of the standard residential bands.
The 36-month refund route only helps people who sell their previous main home. In a classic let-to-buy you don’t sell it, so the surcharge is a permanent extra cost.
On a £400,000 new home, the 5% surcharge alone is £20,000 — the single biggest tax cost of going let-to-buy rather than simply moving.
2. Income tax: the old home becomes a rental business
Once you let your former home, the rent is taxable property income. You can deduct allowable running costs, but mortgage interest is not a deductible expense — under Section 24 it only gives a 20% basic-rate tax credit. For higher-rate taxpayers that materially reduces the after-tax return.
You’ll also need to register for Self Assessment and, once your income crosses the threshold, comply with Making Tax Digital for Income Tax.
3. Capital Gains Tax on a later sale
Here’s the long tail. When you eventually sell the let property, the gain is split by time. The years you lived in it as your main home, plus the final 9 months of ownership, qualify for private residence relief and are tax-free. The period it was let is taxable in proportion, at 18%/24% after the £3,000 allowance.
The longer you keep it as a rental, the larger the taxable slice grows. This is why let-to-buy is often best seen as a medium-term plan, not an indefinite one.
New landlord? Start records on day one
LandlordTaxAi categorises rent and expenses on your old home from the moment you let it — keeping you MTD-ready and your Section 24 figures accurate.
See how it worksA worked example
Priya keeps her £250,000 flat (lived in 5 years), lets it, and buys a £400,000 house to live in.
| SDLT on new home (standard) | Per the bands |
| Plus 5% surcharge on £400,000 | £20,000 (not refundable) |
| Rent on the flat | Taxable; interest = 20% credit |
| Sells flat after letting 5 years | ~Half the gain taxable (let period) |
Priya’s 5 years of residence plus the final 9 months are covered by private residence relief; the 5 years of letting are taxable in proportion when she sells.
Frequently asked questions
Do I pay the stamp duty surcharge with let-to-buy?
Usually yes. Keeping the old home means you own two at the end of the day, so the 5% surcharge applies to the new home.
Can I claim the surcharge back later?
Only if you sell your former main residence within 36 months and it was genuinely replaced. In a typical let-to-buy you keep it, so there’s no refund.
Is the rent from my old home taxable?
Yes. It becomes a rental business: profit is taxable and mortgage interest is restricted to a 20% credit under Section 24.
Will I pay CGT when I sell the let property?
Possibly. Years lived in (plus the final 9 months) get private residence relief; the let period is taxable in proportion.
How is let-to-buy different from buy-to-let?
Buy-to-let buys a new property to rent; let-to-buy lets your existing home and buys a new one to live in — so the second-property rules apply.
Do I need a special mortgage?
Typically you remortgage the old home to a let-to-buy/consent-to-let basis and take a residential mortgage on the new one. Tax follows each property’s use, not the mortgage label.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 29 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property; https://www.gov.uk/stamp-duty-land-tax/residential-property-rates; https://www.gov.uk/tax-sell-home. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.