Retrospective probate house value

srjenk

We were given a probate value when selling our mothers house.  It was lower than expected but we were told that was what they did for probate values so accepted this.   We sold privately and it went for the lower side of value but because the probate value was so low we have now received demand for capital gains payment and the fines from the sale back to 2022.  The sale was made was 6 months after death and HMRC are viewing the difference as a profit since we inherited when in fact it was just under valued.   I believe the fine may be reduced if we pay the bill but presumably not if we get a correct value and then resubmit figures to probate. Do I have to go to a surveyor?  We approached the estate agent who undervalued and he just said how was he supposed to remember?   

Bookworm105

did a professional person do the probate or was this DIY?
When applying for probate it is indeed common to declare values on the low side as a way to reduce / eliminate exposure to inheritance tax.
HMRC wised up to that eons ago so the rules are for estates where no Inheritance tax was actually paid to HMRC, then the values used in the probate application have not been "ascertained" by HMRC. ie formally accepted. Instead, at a subsequent date when the property sales completes, then an actual value has been "ascertained" as real cash changed hands, not just a paper valuation 

If you now wish to revise your probate application to increase the value and thus "eliminate" any capital gain there are very strict time limits (max 2 years after date of death) and rules for doing so. I suggest you do not DIY it .....

user1977

A surveyor sounds more reliable than an estate agent (or than this one anyway!).

p00hsticks

user1977 said:

A surveyor sounds more reliable than an estate agent (or than this one anyway!).

I've always heard that if you don't get a professional RICS valuation for probate, then you should at least get three estate agents and take an average. 

If you tell estate agents that you are intending to sell ,then in my experience they usually over-egg the potential selling price to get you to go with them (and then get your to drop the price later if it doesn't sell) so it's unusual to find one who under-estimated, especially as it sounds as if it went on the market a few months later for a much higher price. 

theartfullodger

Sorry for your loss.

IMHO HMRC are correct... 

CGT needs declaring AND PAYING within 60 days of sale. HMRC I believe entitled to fine for late declaration & payment (and likely you've gone into the "we'll keep a close eye on this lot) pile of cases... 

As far as I know CGT calculated on whatever probate said was the value (which may have had an impact on IHT), not what someone makes up (ie estimates..) it "should" have been. 

I and my sister were in a similar position when selling our late brother's house (he died intestate so it came to us).  Declared and paid promptly, obvs.

The country (ie us lot..) needs the tax income. 

propertyrental

Assuming HMRC accepted the probate value you claimed (they sometimes ask the District Surveyor to check), then any increase in value from date of death (probate value) to date of sale, is subject to potential CGT.

CGT must be declared/paid within 60 days of sale.

Failure to meet the 60 day timescale results in a fine.

GDB2222

propertyrental said:

Assuming HMRC accepted the probate value you claimed (they sometimes ask the District Surveyor to check), then any increase in value from date of death (probate value) to date of sale, is subject to potential CGT.

CGT must be declared/paid within 60 days of sale.

Failure to meet the 60 day timescale results in a fine.

However, if no IHT was payable, there have been cases where HMRC have later challenged the probate value when it comes to the CGT calculation.

I strongly suggest that the OP gets professional advice on the CGT issue, as he may not be stuck with the probate value.