Inheritance Tax Valuations – Freehold House

Inheritance Tax Valuations - Freehold House

Overview

A famous quote by Benjamin Franklin states, “in this world, nothing is certain except death and taxes.” Unfortunately, that is as true today as it was 1789 -making it even more important to understand probate valuation and IHT (Inheritance Tax).

We were recently instructed by our client, to undertake a valuation in accordance with Section 160 Inheritance Tax Act 1984, for probate, of a residential house in the South Somerset area. The property had a Freehold title and comprised a detached large 6-bedroom house with circa 2 acres of land.

Situation

The valuation figure known as Probate Valuation is conducted as at the date of passing not at the date undertaken. This is submitted to HMRC to determine if the estate is valued above the Inheritance Tax Threshold which is currently set at £325,000.

If the total is below this figure, IHT is not required, however, if over this figure, IHT will be payable. As always, to complicate matters, there are certain exemptions, such as ‘A spouse/civil partner of the deceased who has been left everything in the Will and is a permanent resident of the UK would not be required to pay IHT’ and we would advise that you discuss these with your legal advisor.

A valuation can be disputed by HMRC if they believe that the valuation provided seems too low or inconsistent with other valuations locally. In these situations, a statement is required from the valuer to explain any differences, or if the valuation was not conducted by a RICS accredited Valuer a new valuation can be requested.

Situations where valuations did not reflect the eventual achieved selling price are not uncommon and have been seen during the last two years of Covid lockdowns with rapid house price increases from unprecedented high demand.

Solution

We undertook a full internal and external inspection of the property and walked the land taking supporting photographic evidence. We completed the report in line with the RICS Red Book requirements and with detailed comparable evidence to arrive at the Market Value of the property, as at the date of death. Once internally verified and second signed the report was delivered to the solicitor/executors for the processing of Probate.

Outcome

The valuation was accepted by the executors and their legal team, and this has allowed Probate to be completed.

Vickery Holman have a team of experienced RICS accredited surveyors across the southwest who undertake probate valuations and work closely with many legal companies and professionals to offer seamless advice and support during the most difficult of times.

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