Probate valuation

sonastin

My OH is executor for a friend's estate. She had completed a remortgage on an equity release deal approximately 2 weeks before she passed away and Halifax's valuation in the key facts document is about £135k.

We had an estate agent come round to give us a valuation on the property and he suggested a realistic sale figure of more like £150k. That fits in with our research on the sale prices in the area when you factor in the condition of the various properties (which he could offer a bit more detail on). While there are other EAs in the area, he is the only independent and I'm not a big fan of the national chains. Everything he said fits in with our expectation and his fees are reasonable so I'm not too keen to get the nationals down to value - especially as the property is 250 miles from where we now live.

So, my question is... what value would you put on the probate/IHT forms? The rest of the estate is worth about the same as the outstanding mortgage so the total is going to be whatever the house is worth and well below the IHT threshold. Does it matter which valuation we put down?

hcb42

I would put in the £135K

EA valuation at £150K seems to back that up - EA tend to overvalue compared to valuer.

And there is no real issue, as under iht anyway.

G_M

I too would put £135

a) you can substantiate this with a written, up-to-date, commercial valuation
b) either way is below the IT threshold
c) even if the property later sells for more, HMRC simply re-adjust the IT payable (if any)

PasturesNew

I've had two EAs round for probate valuation in the past week and they said to me that they usually value a house up a few quid for probate purposes for the following reasons:

1] The figure is to enable the executors/solicitor to tot up the total value of the estate (for HMRC) to see if the total estate is anywhere near inheritance tax. If it is, then it's better for the solicitor/executor to overpay any inheritance tax at that point, then do a reclaim if it's sold for less, than to do an updated tax payment if it sold for more than they guesstimated.

2] If the estate/beneficiaries hold onto the house for a bit before selling and the market's improved it could add the complication of Capital Gains Tax for them to sort out.

The probate figure I was given was about 8% above the figure the EAs both thought the house would actually achieve.

In my case, both EAs were fully aware that the total estate was nowhere near any inheritance tax thresholds whatsoever, nor could any potential improvement in the market seriously make CGT an issue, so they weren't erring for caution, it's just the way it's done.

googler

Get an RICS surveyor's valuation. Tell them you need it for an estate valuation.

HMRC won't question it if there's any dispute over estate valuation. If you derive figures based on EA values and your own estimates, they could well do.