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Probate valuations and capital gains tax
sarahs999
Posts: 3,751 Forumite
I'm in the process of selling my parents' house after my dad died in January. The RICS valuation we received seemed low to me (£300,000) and I mentioned it at the time to the probate lawyer and to the company managing the sale. I asked for the house to be marketed at £350k. I now have an offer of £355k on the table, which I've accepted (and which I feel bears out my belief that the house was worth more - I had three separate valuations by other estate agents). The probate lawyer has now written to me saying I may be liable for capital gains tax on the £55k extra.
This is frustrating given that I felt the RICS valuation was too low. Can I challenge the valuation? I am a very low earner so I know that I am entitled to an 'annual exemption amount' of £12,000 on the gain, but that doesn't go far. Is there anything else I can do? Thank you.
This is frustrating given that I felt the RICS valuation was too low. Can I challenge the valuation? I am a very low earner so I know that I am entitled to an 'annual exemption amount' of £12,000 on the gain, but that doesn't go far. Is there anything else I can do? Thank you.
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Did you buy the property at £300,000 off The Estate or inherited it and now you are selling it for £355,000...if so and this was a second home then yes you will probably have a CGT liability.
You will be £43,000 up on the deal so if you are liable you are still winning.0 -
When valuing for probate I was happy for the low value as less IHT tax payable ..
You could challenge the valuation if the 3 other valuations were similar to what it eventually sold for, but they must be in writing .. I'm not sure you would get too far in this though as you would be challenging HMRC and in my experience aren't very forgiving !!0 -
If the probate valuation had been higher, would that have resulted in more IHT payable, and if so who would have been paying it?0
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Who is selling the property the estate or you?0
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Thrugelmir wrote: »Who is selling the property the estate or you?
This is frustrating given that I felt the RICS valuation was too low. Can I challenge the valuation? I am a very low earner so I know that I am entitled to an 'annual exemption amount' of £12,000 on the gain, but that doesn't go far. Is there anything else I can do? Thank you.
It would seem that the individual is the one selling as they mention that they are a low earner....either way they are looking at netting close to a third of a million pounds cash, so a bit of extra tax shouldn't be too much of a bitter pill to swallow.0 -
If the probate valuation had been higher, would that have resulted in more IHT payable, and if so who would have been paying it?
in most cases there is no IHT and that might be the case here in which case the probate valuation is annoying and ideally you would want to challenge it assuming there were some debts etc and the overall estate value was lower than the threshold. .0 -
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I am a very low earner so I know that I am entitled to an 'annual exemption amount' of £12,000 on the gain, but that doesn't go far. Is there anything else I can do? Thank you.
Selling fees are deductible before CGT liability is calculated. Likewise if the estate is selling the property the RICS valuation fees can be deducted.
What was the value of the entire declared estate at probate?0 -
Where this is a large difference between the declared value of a property for IHT purposes and the sale price only a few months later, there is usually a request to adopt the sale price as the value for IHTIf you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales0
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you will struggle to get HMRC to accept the substitution of the sales value for the original probate value
there is actually case law around just such an event and it decided that upwards valuations are not allowed where no inheritance tax was originally paid - ie as already mentioned the value was not "ascertained" for probate purposes
see Stoner v Inland Revenue
https://library.croneri.co.uk/cch_uk/btcbin/2001-spc-2880
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