The Family Home – Valuation for Probate
In 2019-20, inheritance tax forms were completed on 257,000 estates, with 204,000 of those (more than 79%) including residential homes.
The total value of these properties was more than £50,000,000,000 (£50bn).
So, along with all the other things that need to be taken care of after the death of a loved one, getting a property valuation for probate purposes can very well find itself at the very end of your list of tasks.
But, the appraisal of the “family home” is a crucial part of the process which must be addressed at some point.
Probate properties are a substantial portion of the housing marketand just to repeat, in 2019-20, inheritance tax forms were completed on 257,000 estates, with 204,000 of those (more than 79%) including residential homes.
The total value of these properties was more than £50,000,000,000 (£50bn).
For HMRC to properly calculate the Inheritance tax owed, the value of assets, including residential property, must be declared before probate can be granted. If HMRC believes that the estate’s value has been incorrectly reported, it can launch an inquiry into inheritance tax. It is vital, then, that the property which forms part of the estate is valued accurately.
When valuing a property for probate, the home’s worth is considered to be it’s open market value (OMV). As the term suggests, it is the value that a property is likely to reasonably be expected to bring in the open market, should it sell to a willing buyer.
The probate appraisal must conform to the date of the transfer, which is generally the date of death of the deceased. Typically, the personal representative, executors or administrators of the deceased would be responsible for valuing assets and contents for the purpose of the probate.
Gov.uk states that if the total gross value of a decedents estate is over £250,000, you will require professional valuation of any assets that are thought to be worth over £500. Anything less than that, an assessment may be used.
So, estate agents and property surveyors are the obvious choices when it comes to making probate property assessments. An estate agent will be able to provide you with an accurate evaluation of how much your property is worth…for free!.
Although, they can’t offer a formal valuation, they will gladly offer their professional understanding of how much a property is worth. This is termed a market appraisal value. But, beware of the estate agents overstating of a home’s value by giving you the asking price instead of the OMV for a property. When speaking to the agent, tell them that you want a valuation on the open market for probate purposes and they will happily assist in getting you the OMV that you will need to start filing paperwork with HMRC.
It might be an idea to obtain several different open market valuations and use an average number from all of them, as it will give you some measure of back-up if the taxman questions your figures later.
A Royal Institution of Chartered Surveyors valuation might be a better choice if the house is not built in the standard manner, or has some other quirks. Similarly, if the property in question has potential for development or is particularly blighted, then a RICS surveyor is well worth talking to.
If the estate is complicated, or a complex one, judges may see a surveyors report as carrying greater weight should a case come before the courts later on.
Remember, although an estate agent will gladly give you a free home assessment for probate, surveyors will charge you their published fees.
For all things related to Property following the death of a loved one, see the resources, articles and business directory on www.funeraldirections.com