An explanation about Probate Property Valuations and what’s involved
It is common that when someone passes away that the most valuable asset in their estate is property. Hopefully, they will have written a will which dictates how their property should be managed. If there is no Will their property and other assets will be distributed according to the rules of intestacy. When applying for probate the property will need to be valued even if the beneficiaries are not planning on selling it.
This would be the price it could reasonably receive if sold immediately at the time of probate. Obviously, the price may change somewhat if the property isn’t sold straight away.
The transfer of property is normally the date that the owner passed away. However, if the property was transferred as a gift within the 7 years before the date of death the transfer date would be the date the gift was given.
In most cases, it is acceptable for the executor or administrator to use valuations provided by local estate agents. It is recommended to get 3 separate valuations and use the average value to show you have made sufficient effort to establish a reasonable market price of the property. You can also look into the land registry; this will show any houses in the area that have been previously sold and what prices they have been sold for.
However it is recommended to use the Royal Institution of Chartered Surveyors (RICS) when valuing a property for probate. After conducting a probate survey the surveyor provide a RICS valuation probate report that is fully complaint to the HMRC inheritance tax laws and is less likely to be questioned by the District Valuer.
Whichever way you decide to have your property valued you must be able to justify it to the district valuer and HMRC if they were to question it. In some extreme cases, this can lead to a penalty or fine if the valuation provided would have affected the amount of inheritance tax that would have been paid on the estate.
How Much Does A Probate Valuation Cost?
There are several factors that determine the exact fee or cost for a Probate valuation. A major factor is total size of property for which you need probate valuation.
Therefore, our advice would be to use a Chartered Surveyor to give an accurate representation of the property’s value. There is much less risk of overvaluing the property resulting in more inheritance tax to pay. As well as less risk in undervaluing the property resulting in more capital gains tax. It also reduces the chances of your application being questioned which can delay the process and incur unexpected expenses.