Exit Strategy for a Second Home: When and How to Sell Overseas

Why Exit Planning Matters

Owning a second home abroad offers lifestyle and diversification benefits — but eventually, most clients reach a point where it makes financial sense to exit.
Whether the goal is realising gains, rebalancing assets, or freeing capital for other investments, a structured exit plan can prevent unnecessary tax, avoid FX losses, and align timing with your broader wealth objectives.

When Is the Right Time to Sell?

Several timing factors influence when you should consider selling an overseas property:

• Market cycles: Align with local real estate trends — Mediterranean markets like Spain and Portugal typically show 7–10-year appreciation cycles.
• Currency strength: Selling when the pound is weak can yield a higher sterling return once converted back.
• Personal tax year planning: Disposing before or after 5 April can change which UK tax year the gain falls into.
• Residency or relocation: Changing tax residence (UK ↔ overseas) can alter which jurisdiction taxes the gain.

Tax Triggers You Must Anticipate

Disposing of a foreign property often creates dual tax exposure — in the property’s country and the UK. Understanding both jurisdictions is key.

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Common triggers for UK residents:

• UK Capital Gains Tax (CGT): Applies to worldwide gains for UK residents. See our CGT guide for current rates.
• Foreign CGT / equivalent: e.g. Plusvalía in Spain, Imposto Municipal in Portugal, Imposta sulle Plusvalenze in Italy.
• Double-tax treaties: Usually allow credit for tax paid abroad against UK liability — but rates and calculation bases differ.
• Inheritance and exit planning: Selling before major life or domicile changes can simplify later estate planning.

The Ideal Window for Sale

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Repatriation: Converting and Transferring Sale Proceeds

Once the sale completes, repatriating funds to the UK introduces new timing and cost considerations:

• Exchange rate exposure: EUR/GBP or USD/GBP shifts can impact your return substantially.
• FX strategy: Using Lucid’s forward contracts can lock in your sale rate months ahead.
• Banking structure: Proceeds should route through compliant, monitored accounts — often using Lucid’s client trust setup to hold and convert safely.
• Timing cash flows: Large repatriations may require staged transfers to align with investment or debt repayment schedules.

Cross-Border Tax & Treaty Considerations

Each jurisdiction treats gains differently — but tax treaties prevent double taxation when structured properly.

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Coordinating Advisors

Lucid typically acts as the central hub, working with your tax, legal, and real estate advisors to align timing, currency, and reporting.
Key coordination points include:

• Tax clearance or local filing obligations
• Repatriation compliance (AML checks, source of funds)
• Legal sign-off for cross-border transfers
• FX execution dates relative to completion

Example Scenario

Case: UK resident couple sell a holiday villa in Portugal for €1.4M (original cost €900k).

• Local Portuguese CGT: ~€70k after reliefs.
• UK CGT (after AEA & treaty credit): ~£48k.
• FX timing via forward: locked €→£ at 1.15 instead of 1.10, adding ~£25k net.

Lucid coordination outcome:

• Gain structured over two UK tax years.
• FX locked ahead of completion.
• Funds repatriated through Lucid account in two tranches to manage investment timing.

Key Takeaways

• Start exit planning 6–12 months before sale — timing can easily shift effective yield by 10–15%.
• Factor in both local and UK CGT liabilities and reporting deadlines.
• Use FX planning to secure real-value outcomes in sterling.
• Coordinate across legal, tax, and financial channels — a Lucid hallmark approach.

Next Steps

Thinking of selling an overseas property?
Speak with a Lucid Advisor to structure your exit, manage tax exposure, and repatriate funds efficiently.

Contact Lucid Financial Markets

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