Determine the value of inherited property

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In the UK, Probate is the legal and financial processes involved in dealing with the money and assets (including property) of somebody who has died.  Here, we outline the use of probate valuations, when you need them, and who should conduct them to determine the value of inherited property.

If you have been named the Executor or Administrator of an estate, you need to be given a ‘grant of representation’ – i.e. be granted ‘probate’ – to have the legal right to pass on or sell their assets as directed in the person’s will.

One of the first criteria of being granted probate is to provide an accurate valuation of the estate, which includes the deceased person’s property, belongings and cash, minus any debts.

This will help HMRC work out if Inheritance Tax is due on the estate and, if so, how much. Inherited properties can only be sold once probate has been granted.

How to determine the value of property in probate? 

The most reliable approach to property valuation is to instruct a Chartered Surveyor to conduct a probate valuation. The value the surveyor will give is defined as its market value, i.e. what it might reasonably fetch if sold on the market to a willing buyer, on the date the owner died (known as ‘the date of transfer’) or the date the property was given as a gift if that happened within the last seven years.

When do I need a probate valuation?

A probate valuation is required when property (houses, buildings or land) is owned by the deceased and the property assets don’t pass directly on to heirs or beneficiaries. A probate valuation is particularly advisable if:

  • the property is of a non-standard construction
  • the property is the only one of its type in the area or if there haven’t been any recent comparable sales locally
  • the property is run down and will need a lot of repairs
  • the property sits on a large piece of land that has the potential for development.
  • the property was shared by joint tenants or even a group of people as it will accurately calculate the value of the deceased’s share.
  • if the property is going to be sold

Who should conduct a probate valuation? 

It’s important to secure an accurate valuation of an estate. Underestimate the value and you risk having to pay out more Inheritance Tax than you expected when the estate is sold, but if you overestimate, you may have to spend significant time trying to reclaim your Inheritance Tax over payment.

HMRC has the right to challenge and investigate a valuation through its District Valuer Service (DVS), which can slow down probate being granted and if it does challenge a valuation, particularly one not supported by a professional surveyor, you could face hefty fines for having been ‘negligent’ in how you obtained the valuation.

By instructing a RICS registered Chartered Surveyor to provide a probate valuation you have the peace of mind of knowing that they follow industry best practice guidelines on how to reach valuation figures and are bound by the codes of conduct of their professional body. This ensues you’re more likely to get an accurate valuation figure that will be accepted by HMRC.

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Need advice or services?

We have an experienced team of RICS registered valuers who can provide probate valuations to determine the value of inherited property. View our probate valuation service here or contact us to discuss your individual needs. 

 

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