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House Valuation for Probate Guide

Property Saviour » Inherited Property » House Valuation for Probate Guide

How do you go about obtaining a realistic house valuation for a probate home?

In this article, we’ll share our tips that can save you the headache of over-paying inheritance tax, minimise any delays and help you sell your inherited house as quickly as possible and for the best price.

Our property team has over 50 years of combined experience in buying, renovating and selling a property. We deal with Executors on a daily basis, so if there’s anything we can do please get in touch.

If there’s a specific topic, you can skip straight to it using our Table of Content.

Table of Contents

How do I value property for probate?

Following the loss of a loved one, the named Executor in the Will will have to apply for a Grant of Probate before an inherited property can be sold.   The Government has made it incredibly easy for an Executor to apply. 

The probate office has a very helpful approach, and many people apply for a Grant of Probate themselves rather than appointing solicitors.  However, you are welcome to use your solicitor if you wish.

Valuing property for probate requires an Executor to come up with a realistic and accurate valuation for chattels, property, and any savings or investments. If you overvalue, you could end up with a larger tax bill.

Valuing property for probate isn’t an easy task for most Executors.  Obtaining a house content value while winding up an estate can be tricky.  We have produced a comprehensive list of frequently asked questions and their answers when valuing an estate for inheritance tax purposes.

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It is important to get an accurate and realistic valuation of probate property because estate agents tend to over-value houses to win your business.

Can I estimate property value for probate?

“How to get a house valuation for probate?” is a common question.  According to Section 160 of the Inheritance Act 1984, for probate, a property’s valuation is determined by a willing seller to a willing buyer. 

Any peculiarities concerning property sale, such as a buyer desperate to move into that particular property and prepared to pay a premium, must be ignored.

In other words, probate property is only worth what someone is willing to pay.  Often, a probate property will require a degree of modernisation; therefore, the valuation must be realistic based on the property’s condition.

Once you submit a return, the District Valuer’s Office will consider the valuation.  If they consider the valuation too low, the person who submitted it will be asked to justify it. 

This situation usually arises when a property is sold for considerably more than the value given shortly after death.

Valuing property for probate requires an Executor to look at what would be ‘done up value’ of a home, consider the cost of refurbishment, allowance for holding costs, contingency and a profit margin.

how many house valuations do i need for probate?

We would suggest getting 3 estate agent valuations.  Ask them for a realistic valuation as they tend to over-value a home to win your instruction.

The safest option is to obtain a RICS valuation in case HMRC question your valuation in future.

Is the probate value of a house the same as the market value?

A probate value must be obtained in a way that’s acceptable to Her Majesty’s Revenue and Customs (HMRC).  For example, you instruct a Royal Institution of Chartered Surveyors (RICS) qualified surveyor to tell you how much your inherited house is worth. 

This would mean that if there were an investigation, you would have to prove that you obtained a professional valuation.  Estate agents offer valuation services. However, it is their opinion.

This establishes how much inheritance tax you will have to pay, whereas a market value is an estimate of what similar property is sold for.  For instance, an estate agent’s valuation is an estimate, not a qualified professional judgment.

Getting a probate value wrong could lead to a potential investigation by HMRC, and you could be held liable as an Executor.

Pros and Cons of Selling a Commercial Property at Auction
Check whether your property is inured while you await for probate. Properties empty for over 28 days are usually not covered.

How to value a property in probate?

Property is the most valuable asset beneficiaries will inherit.  It is also the most illiquid of all asset classes, meaning you can’t sell a property on the same day to release equity.  Estate agents offer a “probate valuation” to win your business. They are likely to be ‘guestimates’ that can cause you pain further down the line with the taxman.

Establishing a property’s actual market value can be carried out by:

  1. Having a proceed able and willing buyer and a willing seller
  2. The sale must carried out within a specific timeframe, i.e. 90 days
  3. The property is offered on the market based on whatever method will achieve the best price, whether it is auction or by private treaty
  4. There is plenty of publicity and advertisement to achieve a sale
  5. The scenario of having a “special buyer” willing to pay more than market value must be ignored.

This logical and sensible approach will result in a more realistic valuation based on the property’s condition rather than an estate agent’s best guess, having browsed around the property for ten minutes.

It is best to appoint a local RICS-qualified surveyor to carry out a professional valuation of your inherited property.  You can discuss issues such as:

It is thought that HMRC would prefer a RICS-qualified surveyor’s estimation of a more realistic value of your property.  As an Executor, you could be held personally liable if you deliberately under-value your property, and equally, over-valuing could potentially mean a higher inheritance tax bill!

While an estate agent will provide you with a free valuation, it is highly likely to be an asking price and not a true reflection of the real intrinsic value of the property.  Estate agents could easily provide you with an inflated valuation, costing you thousands in inheritance tax and selling the property at what might seem like a loss – even if it achieved its true value.

How much should a probate valuation cost?

Probate valuation of all assets could cost between 1-5% of the value of an estate.  This figure includes professional valuation of items such as jewellery, classic cars, art, etc.

However, property valuations are free by estate agents.  Don’t forget that agents tend to over-value your property between 5-10% to win your business.

can estate agents lie about offers
Empty inherited properties require weekly inspections as stipulated by insurance underwriters. You have to keep a weekly log and take time-stamped pictures.

How to get a house valuation for probate?

The most reliable valuation report will be a RICS valuation.  You can ask the valuer for a 30-day valuation and a 90-day valuation.

In the current economy, it takes around 6 months to get a property under offer and then a further 3 months for the conveyancing process to complete.

If your house isn’t selling, you will need to look at the price and the market efforts.

What should be in a Probate Valuation Report?

HMRC need to be satisfied that the valuation carried out is accurate.  As a guide, these are considerations that could be included:

  1. Type and style of property
  2. When was the property built?
  3. Current state of repair (including any improvements required)
  4. Special property features – is it a listed building or in a conservation area?
  5. Location to local amenities and schools
  6. Boundary or any ongoing disputes with neighbours.
 

How to sell a probate house?  Whether you are an Executor or a Beneficiary who wishes to sell a probate house, we have the experience and expertise to help.

What about insuring an unoccupied property during probate?

If your property is unoccupied, it is no longer insured unless you have taken out specific vacant property insurance. The last thing you need is burst pipes or opportunistic thieves targeting your property.

It is best to get a full perils cover that covers you for theft, squatters and vandalism.  Please read our guide on essential maintenance steps to protect your empty property.

What is included within a probate estate when selling inherited property?

  1. Joint Accounts
  2. Property
  3. Pension Scheme
  4. Insurance policies
  5. Debts

It is required that the assets are given a “probate value”.  This is simply the market value, what price they would fetch on the open market.  It is essential to obtain professional valuations as the HMRC will require this information. 

This will determine how much capital gains tax is due on your inherited property estate.

It is important to remember that any significant gifts that the deceased person gave in the last seven years must be disclosed, as they might be liable for inheritance tax.  The government guides this under the “seven-year rule”.

Divorce or breakdown of relationship
Collapsed sale of inherited property leads to frustration, arguments and disagreements amongst beneficiaries.

What if it is a jointly owned property?

If the deceased person owned a property with another person, the property doesn’t form part of the estate.  The deceased person’s share must be included when calculating the estate’s value. For instance, the value of a property is £500,000; therefore, assuming a 50:50 ownership, the deceased’s estate is worth £250,000.  Therefore, no capital gains tax is payable when selling inherited property.

At Property Saviour, we understand the stress and upset when selling a probate property, especially when this is a family home.

The last thing you need is to deal with estate agents, obtain valuations, place your property on the market and deal with viewings. We can take that stress away.

If you have inherited a property, we can help you navigate your way through the red tape. Property Saviour can buy your inherited property!

How to Obtain a Probate Valuation on House Contents?

An Executor’s primary duty is to value the deceased’s entire estate based on its open market value.  Estate valuation for probate includes the deceased’s property, personal possessions, and their goods and chattels. 

Valuing chattels

The term chattels refers to possessions contained in the property that are not part of the fabric of the building, such as furniture, whereas radiators are fixed to the wall.  For purposes of inheritance tax calculation, the Executor must place open market value for all household content and personal possessions. 

As part of the winding up estate process, the Executor’s declaration will include an overall probate valuation figure.

Probate home valuation
Any geniune cash house buyer will be able to provide proof of funds, pay your legal fees and complete in 10 days or quicker.

Why is probate house valuation a time-consuming process?

Do you have a vast collection of valuable personal possessions that require a specialist valuer, such as an auctioneer like Sotheby’s, or is your estate straightforward to value?  The following pointers will help you decide:

HMRC have imposed strict deadlines for Executors to follow:

  1. Please note that HMRC requires you to complete an inheritance tax form to be completed within six months of the death of your loved one.
  2. Any inheritance tax must be paid within six months of death.

Which forms do HMRC require when dealing with Probate Property Valuation and Valuation of personal possessions and chattels?

You will need to carefully complete the following forms:

The forms are available online and can be downloaded from www.hmrc.gov.uk/inheritancetax/

Cash buyer for the house?
Sadly there are two certainties in life - death and taxes.

Do I pay capital gains tax when I sell an inherited property?

The capital gains tax rate on selling an inherited property is only payable if it is sold during probate and its value has increased since the person died.  Then, capital gains tax on inherited property, once sold, is payable.

This tax is calculated on how much the increase is since the deceased’s death because beneficiaries inherited the asset at their probate value.

How do you avoid inheritance tax when selling an inherited property?

The idiom “in this world nothing is certain, except death and taxes” by English writer Benjamin Franklin is true here.

Inheritance tax only kicks in when the estate is worth more than £500,000 if the beneficiaries are children. A quick Google search reveals several inheritance property tax avoidance schemes.  These cover how you can claim a loss on the sale of inherited property for tax purposes and declare a loss on the sale of inherited property to a related party.

Any tax dodging is considered a criminal offence. It is best not to get involved in inheritance property tax avoidance schemes because HMRC is known for seizing assets and putting tax dodgers behind bars.

HMRC use sophisticated data to validate whether the sale of an inherited property at a loss took place. On what basis can an inherited property be sold at a loss? You, as an Executor, could be held liable personally for providing incorrect probate valuation.

Avoiding paying capital gains tax when selling an inherited property can land you in jail. Why risk it?

Under exceptional circumstances, you can claim that you sold an inherited property at a loss, e.g., unpaid care home fees being higher than properties worth at the time of death. In this situation, you’d have to ask your accountant how to report the sale of inherited property on your tax return and ask whether the loss on the sale of an inherited residence is deductible against your taxable income.

Selling an inherited property

In almost all cases, the longer a sale of an inherited property drags on, the more bills are piled up, such as property insurance, utility bills, maintenance and keeping an eye on the property, solicitors’ fees as they are on an hourly rate, etc. 

Many of these costs are avoidable so that you can get more money in your pocket faster.  You can agree to sell a house before probate is granted.

Dealing with a probate property buyer such as Property Saviour can help.  Unlike an estate agent sale with lots of viewings, frustrating delays and the buyer changing their mind or not being able to get a mortgage, this is a real alternative. 

We can make an indicative cash offer today.  We will complete the purchase within a few days or a timescale that suits you.  You can sell the property as it is, in its current state.  There are no fees to pay, and the price we offer is the amount you will receive.

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What happens if the house is sold for more than its probate value?

In the past, HMRC have increased the Inheritance tax owed if the property is sold for more than its probate value when the sale is made soon after a Grant of Probate has been issued.

Many Executors feel that guidance from HMRC is not clear.  You can challenge any increases with the District Valuer.  However, it will likely lead to further distress, delay, and aggravation.

If the administration of the deceased estate is prolonged, and the final sale price is higher than the probate value, you must also consider Capital Gains Tax liability.

what does a Grant of Probate look like
Grant of Probate or a Letter of Administration gives an Executor the legal power to be able to sell an inherited property.

What happens if the house is sold for less than its probate value?

You could be due a tax refund from HMRC if your house has sold for less than its probate value within four years of the deceased’s passing.  It is best to consult with your solicitor before raising a claim to maximise your chances of success.

When can an inherited property be sold?

Inherited property can be sold once you have obtained a Grant of Probate.  Contacting Property Saviour can help you save time and money and avoid the anxiety and stress of dealing with estate agents and their non-committed buyers.

Property Saviour is proud of our reputation of working with Executors and their beneficiaries across England and Wales.  We have several testimonials and case studies to share with you.

Give us a call or request a call back for a chat about how we can help.

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I am an Executor outside the UK.  Can you help?

It is always a pleasure to deal with Executors abroad.  Please request a callback, and we will do our best to help.

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  • The price we’ll offer is the price that you will receive with no hidden deductions.
  • Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
  • These valuations or surveys result in delays and price reductions later on.
  • We are cash buyers.  There are no surveys.
  • We always provide proof of funds with every formal offer issued.
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