Property valuation for IHT/Probate

cloud_dog

Hi

My FIL passed away very recently and I am trying to assist the family with some aspects.

The estate is relatively straightforward; house, cash ISA, and bank account, all well below the IHT threshold. The estate is to be shared equally by the three adult children (all are executors).

My question revolves around obtaining / using a valuation for the property for IHTcalculations and probate. Can you obtain a valuation from any estate agent or do they need certain accreditation (I've seen mention of RISC mentioned)?

Yorkshireman99

cloud_dog wrote: »

Hi

My FIL passed away very recently and I am trying to assist the family with some aspects.

The estate is relatively straightforward; house, cash ISA, and bank account, all well below the IHT threshold. The estate is to be shared equally by the three adult children (all are executors).

My question revolves around obtaining / using a valuation for the property for IHTcalculations and probate. Can you obtain a valuation from any estate agent or do they need certain accreditation (I've seen mention of RISC mentioned)?

You need a valuation by a RICS qualified surveyor that will have to be paid for.

Rich2808

Yorkshireman99 wrote: »

You need a valuation by a RICS qualified surveyor that will have to be paid for.

Is this always necessary - for example if the (sole) house passes to a spouse so the valuation would not be subject to IHT?

Yorkshireman99

Rich2808 wrote: »

Is this always necessary - for example if the (sole) house passes to a spouse so the valuation would not be subject to IHT?

That would be an exception.

Linton

This keeps on coming up. You do not need a surveyors valuation for probate. You can have an EA valuation if you wish. You could even do it yourself based on recent sales of similar houses in the area. However it may be prudent to use a surveyor as HMRC are less likely to question the valuation and in the case of objections by HMRC taking professional advice should protect you from suspicions of fraud. When my fathers house was sold a couple of EA valuations were used on the recommendation of our solicitor.


See https://www.co-oplegalservices.co.uk/media-centre/articles-may-aug-2018/how-to-get-a-house-and-its-contents-valued-for-probate/ for example.


Or see https://www.homeprotect.co.uk/probate-insurance/valuing-property-for-probate

cloud_dog

Thanks for that.

I can understand the need for a more formal valuation where IHT may marginal or a consideration but the estate is likely to be significantly under the IHT limit (approx £225k).

Yorkshireman99

Linton wrote: »

This keeps on coming up. You do not need a surveyors valuation for probate. You can have an EA valuation if you wish. You could even do it yourself based on recent sales of similar houses in the area. However it may be prudent to use a surveyor as HMRC are less likely to question the valuation and in the case of objections by HMRC taking professional advice should protect you from suspicions of fraud. When my fathers house was sold a couple of EA valuations were used on the recommendation of our solicitor.


See https://www.co-oplegalservices.co.uk/media-centre/articles-may-aug-2018/how-to-get-a-house-and-its-contents-valued-for-probate/ for example.


Or see https://www.homeprotect.co.uk/probate-insurance/valuing-property-for-probate

There is NO one size fits all answer. I depends on how close the estate irO THE IHT threshold. I the beneficiaries intend to sell without living there it forms a sound basis for future CGT purposes.

Tom99

Remember the estate might have a CGT liability if the estate sells the property at above the figure you use for probate.
Say you put £225k down for probate but sell for £250k. There will be a gain of £25k but less costs and the £12,000 annual allowance.
Not a big problem but if the house has a likely range of values then using a higher one for probate, when it will make no difference to IHT, may be the way to go.

Uxb1

Does the "estate" if it sells the house get any annual GCT allowance?
I know that for income earned by the estate during the estate admin period it is ALL taxed at 20% with no zero rate personal allowance. but i've no idea who it work for CGT - maybe all the gain taxed at some rate?

Tom99

Uxb1 wrote: »

Does the "estate" if it sells the house get any annual GCT allowance?
I know that for income earned by the estate during the estate admin period it is ALL taxed at 20% with no zero rate personal allowance. but i've no idea who it work for CGT - maybe all the gain taxed at some rate?

The estate has the full £11,700 allowance in the year of death and the two following tax years. It pays CGT at the higher rate, so 28% on residential property. All the usual costs are allowed plus a generous scale base allowance for obtaining probate.

cloud_dog

Thanks everyone who has contributed, it has helped clarify certain aspects.

Based on the above summary being true, i.e. it may vary by + / - £10k, I envisage that forms IHT205(2011) and PA1P will be required to be completed.

Anyone see any fundamental issues with that?