Increase in house value after probate granted.

buffalito

We completed probate on my late father's taxable estate in Oct 2021. During probate we had the house (in Wales) valued. The house hadn't been updated in a long time and needed extensive modernisation. I had two surveyors look at it. One of them provided a RICS report and both gave me a valuation of £250k. After probate we transferred the house into our names and my brother continued to live in it as his only residence.

We've now had it valued after renovation @ £300k. Would the RICS valuation back in May 2021 still stand? When I looked into it there's a law/rule that says the probate valuation can still be changed within three years or does the fact that we transferred it into our own names mean the probate value is now the acquisition value and cannot be changed?

Thanks in advance.

bobster2

Whether or not it is possible to amend the original valuation - the fact that it's now valued at £300k having been renovated and modernised does not change the value at the time your father passed.

Keep_pedalling

For capital gains purposes it will be the probate value that you have to use you can’t change that now. If you are planning to sell your brother is exempt as it his main residence, your share of the gain will be taxable. You can take off the selling costs from the gain and some of the reservation costs may also be deductible. For instance the cost of installing central heating where none existed previously can be deducted but replacing a clapped out boiler with a new one is considered maintenance so can’t be deducted. 

buffalito

For IHT purposes the value cannot be changed then? I was thinking the valuations office may decide after disposal the value wasn't correct and as it was a taxable estate I don't want to pay any more IHT.

Keep_pedalling

buffalito said:

For IHT purposes the value cannot be changed then? I was thinking the valuations office may decide after disposal the value wasn't correct and as it was a taxable estate I don't want to pay any more IHT.

Sorry I misunderstood the question, I was looking at it from a CGT point of view rather than an IHT one.

It is possible that HMRC might challenge the valuation, but the fact that you had a RICS valuation and can prove you have spent a significant amount of money on renovation would probably see such a challenge fail.

Dilbert_Investor

We had an estate agent valuation for probate purposes.  We checked this with a few others and they all came in around the same value.

We have also done a lot of maintenance work in the last year, but don’t that can be deducted for CGT purposes.

mybestattempt

The rule is that the same date of death/probate value must be used for both IHT and CGT.

If an estate was liable for IHT then the date of death/probate value used in the IHT return has been 'ascertained' for CGT purposes:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg32210


For an excepted estate, where no IHT was due, the date of death/probate value is not 'ascertained' then HMRC will need to determine the date of death/probate value and will ask the Valuation Office Agency (VOA) for a valuation:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg16251

Keep_pedalling

This thread is from 2023! 

mybestattempt

Apologies, I hadn't noticed.