When someone dies, they leave an estate. This usually comprises the money, possessions and property that the person had at the time of passing. For executors or administrators, a property is the most valuable part of an estate, whether it is a family home, a business concern or a buy-to-let.
Each individual probate case is different. If the deceased didn’t own a property, there is no need to worry about property during the probate process. If the deceased had a partner or spouse and they owned a property as joint tenants, the property automatically passes to the survivor, even if the rest of the estate has been left to other people. If the deceased owned a property with a spouse or partner in the form of ‘tenants in common’, the property is left to the person detailed in the Will. If there was no Will, the next of kin/closest family members take ownership of the property under inheritance law.
A probate valuation refers to the price someone would be willing to pay for the property on the ‘date of transfer’. This is the day the deceased died, or the day that the property was given to someone as a gift, as long as the gift was within the previous seven years.
If a property is part of someone’s estate, it needs valuing for inheritance tax purposes - even if there is a joint tenant or the beneficiaries have no intention of selling the property. That’s because the value of the entire estate needs establishing before a probate application can be made. If the deceased owned more than one property – residential, commercial or rental – each will need an individual probate valuation.
A property valuation for probate is also necessary should a beneficiary want to live in an inherited property but choose to sell it later. Any capital gains tax that’s due upon the sale of an inherited property is calculated using the value of the property when the person died versus the value of the property when it was sold by the beneficiary, with tax due on any profit made.
A probate valuation is the property’s value worked out in accordance with HMRC guidelines - it is different from a value for insurance purposes, or the cost to rebuild the property. A market valuation is the price a property would sell for if it was advertised to buyers on the open market. Although probate and open market are two different valuations, they will be very similar and quite often amount to the same figure.
Many Will executors or administrators will want to conclude the probate process as quickly as possible. Although it may be tempting to Google how much a property is worth to get an instant figure, the data held by portals such as Rightmove and Zoopla is not always accurate or reflective of individual property conditions. Figures online tend to be a guide or displayed as a price bracket with a big gulf between the lower and upper estimates.
If the property is of a standard construction, with no unusual caveats, covenants or restrictions attached, you should contact an estate agent for a probate valuation. They will use real-time sales data and any lease information, together with the condition, style, size, and age of the property, to supply a probate valuation.
If the property in question is of non-standard construction, is dilapidated, sits on a large plot of land, is very unusual or is in an area where there has been a lack of similar property sales in the last few years, contacting a RICS-registered chartered surveyor for a probate valuation is the best option. Likewise, if the property is tenanted or has occupants of another type, a chartered surveyor should be instructed.
The consequence of an inaccurate valuation is a challenge from HMRC and potentially a higher inheritance tax bill. In cases where HMRC believes the executors or administrators have been ‘negligent’ on valuation matters, it could also impose financial penalties.
Once the entire estate has been valued, the probate application forms completed, any inheritance tax paid, any probate fees paid and either a ‘grant of probate’, ‘letters of administration with Will annexed’ or ‘letters of administration’ obtained, the settling of the estate can begin, and a property be sold.
We appreciate that selling a probate property can be a sensitive and emotional exercise. Probate Move provides a discreet and professional direct buying service, tailored to the financial needs and timescales of the beneficiaries. Many find our rapid ‘exchange in seven days’ service preferrable to an open market sale that could take months. We also do not charge estate agents fees and we will cover a sellers’ solicitor fees to simplify the entire process. Please get in touch to discuss any probate property.