Valuing a property for probate – what you need to know

After someone has died, valuing a property for probate is a key task for anyone dealing with the estate of a loved one. It can be a difficult job at such an emotional time but valuing a property for probate is best tackled sooner rather than later. If the home you’ve inherited is in Putney, Wandsworth or elsewhere in south west London, it’s likely to be a substantial asset with some inheritance tax to pay, so you need to get an accurate valuation as a priority. If this sounds daunting, there are ways to make the process go as smoothly as possible. We look at some of the things you need to consider.

What is a probate valuation?

Probate is the legal process of dealing with a person’s estate after they have died. Once probate is granted, the executors of the estate can distribute the money and belongings among the beneficiaries. You need to apply for probate as quickly as possible as it can take some time. Part of the process of applying for probate is working out the value of the estate including property, bank accounts, pensions, cars, furniture, jewellery and artworks.

Why is valuation for probate necessary?

You must get a valuation of the estate so HMRC can calculate how much inheritance tax is owed. Inheritance tax forms must be submitted before you can apply for probate.

When should you get a valuation?

You should move to get a valuation as soon as possible after the person has died. This is because inheritance tax must be paid on the estate within six months of the death and probate valuations can take some time. Inheritance tax forms must also be submitted to HMRC within a year and before you can apply for probate. And if you wish to sell the property, you need to have a grant of probate before you can proceed with a sale.

Steps for getting a probate valuation

1. Identify who is responsible for the valuation

If the deceased has left a will, the person named as their executor is responsible for arranging the property valuation for probate. If there is no will, the administrator of the estate is responsible for arranging the valuation. The person’s closest living relative can usually apply to be the administrator.

2. Get an idea of the property’s worth

Before you arrange a property valuation for probate get an idea of the value of the home from recent sale prices and other similar properties on the market. At this stage, pull together any information about the home that would be useful to the valuation such as its condition, unique features and any issues.

3. Have the property valued

You aren’t obliged to pay for a survey to value the property for probate, but bear in mind that HMRC can query your valuation and impose penalties if it’s felt to be inaccurate. You have three options:

• You can appoint a professional surveyor registered with the Royal Institution of Chartered Surveyors,(RICS). This is the most accurate way of getting the property valued for inheritance tax purposes, however, there will be a cost.
• Alternatively, you can ask a local estate agent for a free valuation. If you choose a reputable firm with good knowledge of the local market this is likely to be reasonably accurate but it is worth getting three quotes to compare.
• You can carry out the valuation yourself using recent sold prices and data from property websites such as Rightmove and Zoopla. However, this method leaves you without the backing of a professional opinion if you are challenged.

4. Consider debts and liabilities

You should also consider any debts attached to the property, as they need to be deducted from its value. These include mortgage payments and any utility bills or charges for repairs that haven’t been paid.

5. Submit the valuation

Once you have a property valuation, you need to submit it to HMRC, along with the value of the rest of the estate. Use HMRC’s form IHT400. There is guidance on how to complete the form on the gov.uk website.

6. Prepare for HMRC scrutiny

If HMRC believes that the executors or administrators have been ‘negligent’ in how they valued the property, they could impose financial penalties. For example, if you sell the house for more than the value in your grant of probate, HMRC may ask an additional payment. If you sell for less, however, you may be able to claim a refund. If probate takes a long time and property prices change you may need to adjust your figures. For this reason, it’s essential to keep a well-organised and accurate paper trail.

If you’ve inherited property in in south west London, contact us. We’d be happy to talk through your options and offer advice on what you need to do next.