DIY Probate. Over value estate?

NokSuCow

Hi guys,

I'll be going through a DIY probate shortly on my late fathers (divorced) estate.

Simple estate with minimal money and 1 property valued around 250k.

I was wondering, is it advisable or even legal to over value the estate to negate any possible future properties rises to avoid CGT? 

Seen as the IHT threshold is 325k, could i not just put that figure in just in case??

It won't be sold for at least a year so the chances of property value going up is high.

I've googling this answer but nothing seems to show up. 

Thanks

Tucosalamanca

Sounds like a good plan.
I guess the Valuation Office could potentially pick up on it but I'm assuming they're mostly interested in folk under declaring?

getmore4less

There is wiggle room as all property valuations are guesses, some more educated than others.

On what basis have you guessed around £250k?

Why the delay in selling?

The valuation probably won't be ascertained during probate  so HMRC could go back and have a look when sold

With a year gap there could be hints that the valuation may have been off at DOD.

Some are obvious others less.

.

NokSuCow

getmore4less said:

There is wiggle room as all property valuations are guesses, some more educated than others.

On what basis have you guessed around £250k?

Why the delay in selling?

The valuation probably won't be ascertained during probate  so HMRC could go back and have a look when sold

With a year gap there could be hints that the valuation may have been off at DOD.

Some are obvious others less.

.

The house is extremely cluttered and in need of some repair before selling. 

250k is what I'm guessing it could be worth going off how much neighbouring properties have sold for. 

uknick

If you're asking, can I put a completely false value into the probate form to avoid CGT at a later date, then no.  That could be considered tax evasion.

But, if you're asking can I estimate the value based on what it will possibly sell for after you make it marketable, then why not?

I'd suggest getting three legitimate valuations from local estate agents to see what they think the property is worth when you have got it ready for sale.

BTW, the IHT nil rate band should be £500k if the house is being left to a direct descendent; £325k + £175k.    

getmore4less

uknick said:

If you're asking, can I put a completely false value into the probate form to avoid CGT at a later date, then no.  That could be considered tax evasion.

But, if you're asking can I estimate the value based on what it will possibly sell for after you make it marketable, then why not?

I'd suggest getting three legitimate valuations from local estate agents to see what they think the property is worth when you have got it ready for sale.

BTW, the IHT nil rate band should be £500k if the house is being left to a direct descendent; £325k + £175k.    

Its the value at DOD, can probably go as far as vacant possession(clearing),  repairs and improvements should not be included.

getmore4less

NokSuCow said:

getmore4less said:

There is wiggle room as all property valuations are guesses, some more educated than others.

On what basis have you guessed around £250k?

Why the delay in selling?

The valuation probably won't be ascertained during probate  so HMRC could go back and have a look when sold

With a year gap there could be hints that the valuation may have been off at DOD.

Some are obvious others less.

.

The house is extremely cluttered and in need of some repair before selling. 

250k is what I'm guessing it could be worth going off how much neighbouring properties have sold for. 

That's a reasonable approach, make notes of the market of similar/close properties should you ever get asked.

A few of the actual sold prices from the land registry, right move has links as well)
A few of the SSTC, capture the actual sold later when they hit the register
A few of the current asking, then monitor for their actual sale

I would also keep the right move pages for your chosen comparison set(they disappear off right move)
The sample set should give an idea of your wiggle room to aim on the high side. 

wicksee

Hi,
Sorry to hijack this post but the OP might be interested in replies to my query also.
I had this exact same situation (naive DIY Probate) however i have already completed the Probate process.

It appears i undervalued my inherited property for Probate (well within IHT threshold).
I used Mouseprice and Zoopla to establish property value; an identical house opposite mine sold in mid-2021 for £184,000. Given that my property needed some work, i declared a reasonable value of £180k for Probate (this was in May 2022).

A few months later, having completed the work to bring the house up to liveable standard, an estate agent has valued the house at about £230,000. A nice surprise, although now i feel that due to my undervaluation i have naively exposed myself to a nice chunk of CGT.

Question:
Is there a way to retrospectively alter the Probate valuation to a more accurate figure, or to declare a lower capital gain when the property is sold, based on an incorrect Probate valuation?
Obviously these values are well within the IHT threshold, this is purely about CGT. Unequivocally i am not trying to defraud the tax man.
I believe it's unreasonable to conclude that the house has inflated in price by £50,000 within the space of 6 months.

Advice:
Based on my experience, I would advise the OP to get an accurate and current valuation and to anticipate a price rise in the time it takes to sell the property. i cannot comment on the legality of this though.

shiraz99

wicksee said:

Hi,
Sorry to hijack this post but the OP might be interested in replies to my query also.
I had this exact same situation (naive DIY Probate) however i have already completed the Probate process.

It appears i undervalued my inherited property for Probate (well within IHT threshold).
I used Mouseprice and Zoopla to establish property value; an identical house opposite mine sold in mid-2021 for £184,000. Given that my property needed some work, i declared a reasonable value of £180k for Probate (this was in May 2022).

A few months later, having completed the work to bring the house up to liveable standard, an estate agent has valued the house at about £230,000. A nice surprise, although now i feel that due to my undervaluation i have naively exposed myself to a nice chunk of CGT.

Question:
Is there a way to retrospectively alter the Probate valuation to a more accurate figure, or to declare a lower capital gain when the property is sold, based on an incorrect Probate valuation?
Obviously these values are well within the IHT threshold, this is purely about CGT. Unequivocally i am not trying to defraud the tax man.
I believe it's unreasonable to conclude that the house has inflated in price by £50,000 within the space of 6 months.

Advice:
Based on my experience, I would advise the OP to get an accurate and current valuation and to anticipate a price rise in the time it takes to sell the property. i cannot comment on the legality of this though.

Your biggest mistake was doing the house up to sell. Probate values are based on the value of the property at the time of death, unless the house is in such a state that it's unmortgageable (not sure if that's a word or not) then there really isn;t any benefit in putting money in to increase it's value.

wicksee

shiraz99 said:
Your biggest mistake was doing the house up to sell. Probate values are based on the value of the property at the time of death, unless the house is in such a state that it's unmortgageable (not sure if that's a word or not) then there really isn;t any benefit in putting money in to increase it's value.

You're right, although my point is that my Probate valuation was too low even before i had any work done.

The only work i've done is to replace the malfunctioning boiler and repair the leaking gutters/fascias/soffits, as well as clearing the contents. I've spent about £5,000, and I considered this the minimum i would need to do to sell the house.

getmore4less

Why was your base line on a house that sold probably over a year ago earlier without any adjustment?
From offer takes a few months to sell and get the actual sale price on land reg.

in most areas the market has been very buoyant since late last year

Has it sold yet?

until then you won't know the current value.