Tax assessment is very important as the inheritance tax (if due) is expected to be paid six months from the day the deceased died. This makes it paramount for the valuation to get done as soon as possible. It is also important to know the value of assets left behind to avoid disagreements where there is more than one beneficiary. If the property of the deceased will be put up for sale, it is only fair that the valuation be done.
In calculating the probate property valuation of a property, it is very important to consider the debt owed on such property. Find out if the property is jointly owned as this the part of the property that has to be valued will only be that of the deceased person in question.
The valuation of a property for probate purposes is basically calculated by using the open market value and comparing it with reasonable local sales evidence on the date of the transfer which is usually the date the deceased died. A reasonable open market value will be an amount that a willing seller is ready to sell to a willing buyer (not a buyer that has a special interest and is willing to pay premium price for the property).
If the property was given as a gift by the deceased to a beneficiary seven years before the deceased died, the date the property was gifted will be regarded as the date of transfer.
Valuation can be backdated so if you get a wrong valuation at first, you may backdate a more accurate one to reflect a back date.
Well, a property valuation can be carried out by anyone but a probate property valuation is unique in its requirements. Many times, the valuation needed for probate reasons is a formal property valuation which would include calculating taxes, revenues and such other associated fee attached to the property.
To forestall any kind of mistakes and for a smoother run with the Inland Revenue, it is better to use the professionals. You may request for quotes as to how much this will cost from estate agents- you should make certain that you do not fall victim of estate agents that may not provide an accurate valuation because they may be trying to get business. Some professional estate agents do fantastic job helping you value your property. The HMRC however recommends that you employ the services of a chattered surveyor for valuation.
Some estate agents offer free probate property valuation but you are likely going to be charged a fee when dealing with a chartered surveyors or some other property agents.
If all you need is an estimate, you may do it yourself and you will be saving yourself whatever cost is attached to it but that may have dire consequences if you do not present a good valuation which results in your valuation getting challenged by the Inland Revenue. You have the option of getting an estate agent who may either charge you or may not as some estate agents offer free property valuation as part of their services. There are solicitors that also offer this service, you can make use of a member of the RICS (which is a recommended option from the HMRC).
Whoever you decide upon, estate agent, solicitor or chartered surveyor, you should expect to pay a fee which may be a percentage of the total value of the estate valued. This may be between 1% and 5%.
Generally, charges are based on the peculiarity of your property as every valuation need is unique in its way.
Beneficiaries naturally prefer a lower valuation to avoid paying no or little inheritance tax. No Inheritance tax is due on properties that are valued at 325,000 pounds or less. However, if your property is valued at over £325,000, you will be required to pay 40% of the additional amount as inheritance tax that is, if the property is valued at 500,000pounds, you will be required to pay 40% of 175,000 pounds which is the excess amount after 325,000 pounds.
After a probate valuation is done and submitted to the HMRC, the report is vetted to be sure that the valuation represents the true value of the property.
The HMRC frowns at the practice of getting a lower valuation for probate purpose and will not hesitate to probe any valuation they suspect is intentionally made lower. If your valuation raises questions, the valuer is called upon to defend the valuation report, if they are not satisfied with the defense, then a district valuer will be sent to make another valuation and if his report reflects a higher valuation, you may face a penalty in addition to the tax you will have to pay.
A higher than normal valuation also makes you pay more money as inheritance tax than you ought to.
Your best bet is to get a good valuer that understands the workings of the system and would make an accurate property valuation report that is up to the standard of the HMRC.