Has anyone regretted not getting a formal valuation before submitting IHT forms

[onthehouse]

Has it come back to bite you? I’d rather have a valuation done but other party is digging heels in saying it’s unecessary.

How does the other party plan to value the property?
Value is needed to determine if IHT is payable so wise to get a valuation of what the property would sell for on the open market when at date of death.

Are you and the other party executors? If so, just arrange the valuation yourself. You don’t need their permission.

at the end of the date the Valuation Office Agency ( a department of HMRC) has final say on the IHT valuation

However, they are only human beings and will be influenced by a CREDIBLE valuation submitted as part of probate.

• done by an accredited valuer (Chartered Surveyor additionally holding the RICS valuer qualification) Valuer Registration Assessment
• done by a valuer who is willing to defend their figure in front of a valuation tribunal if necessary (at your cost of course)

Doing it on the cheap (eg a few extracts from Rightmove SOLD prices records) may save you money and may, on a good day, be taken at face value, but rather depends on whether you fancy yourself as an astute gambler.

A minimal expense for a decent outcome. What’s the contention?

We have two valuations from estate agents and house is on the market. Relationship has also soured.

This is from 20+ years ago, but, after my parents died I agreed with my brother that I would buy him out of his share of the house.We were told directly by an IHT advisor that we absolutely didn't need an EA valuation and to make a best guess at the value ourselves based on similar properties that had been sold in the area. The house was distinctly different to surrounding houses - an Edwardian semi surrounded by very large Edwardian and 1940s detached houses and 1990s upmarket flats a couple of doors down - so it was difficult to guess a value. There was no Rightmove in those days! Coincidentally, the neighbour in the adjoining property had had his property valued for a remortgage so we took this figure but reduced it by what we calculated was a fair amount as our parents' house was distinctly shabby and in need of some renovations whereas his was well maintained.

The IHT accused us of submitting a low valuation to avoid paying the correct amount and wanted to penalise us but we managed to argue our case and avoided penalties.

I'd say that two EA valuations and the house being on the market gives you a pretty good idea of the value for IHT purposes, although it could be worth phoning the IHT office to see what they advise, but make a note of what is said.

We got slightly bitten. EA gave a figure, likely off the top of his head at date of death, which was on the low side. It transpired that the house couldn't be sold for a further two years and by then it had by then gone up in value. The difference between those two figures was £40k. We got around the issue because the home had been willed to eight people, each of whom had an allowance.

Two EA valuations and the house on the market is probably OK. But check out the valuation cost. it might suit you to go ahead with it independently if you think things are going to be difficult and it matters.

Our solicitor said it’s ok when I said I had concerns ignoring HMRC advice which surprised me. He said we can get a surveyor in at a later date if need be. I said I’d still be happy to get one after what the solicitor said, but couldn’t get agreement to that either. Every decision feels like a fight - from the minor to the major. I’ve started to dread speaking to them and my voice doesn’t really count for anything when I do speak. We used to be so close, but maybe that was just in my head.

Sympathy to you @onthehouse. Let me guess the 'other party' was not around when you needed them and now, when there is money involved, they want to absolutely maximise their take? I have a friend who is now in a significant legal dispute with her DBro over something similar.

When FIL died we didn't bother and we did the probate ourselves, as everything went to MIL. When she died and IHT became payable our solicitor advised us to get a valuation. We also got him to do the submission to HMRC. He warned that any errors could delay probate by years and we weren't prepared to risk that. Even then probate still took months longer than they advised.

I did all of the paperwork for my mothers and that included a number of properties. We had to do iht 400 plus all of the supplementary forms. For the property valuations I got an online property valuation and it showed a higher / lower and mid and we just took the mid. I thought it was a little overvalued, but it was going to my dad so didn’t matter and might benefit us in the future. It was accepted by HMRC.

I thought HMRC were more likely to contest if there wasn’t a proper valuation. I got told I’m stressing about things that haven’t happened.

I don't know that much about it but I thought if you actually sell for more/less than your valuation then that is taken into account, so the valuation is only a guide rather than the actual value used for the calculation ?

I suppose there is more of an issue if the property is transferred to one of the beneficiaries.

What if things have gone up or gone down between date of death and selling?

We got three valuations of the house and used the average. The house sold for more than the figure we used so we paid CGT on the difference without any bother. There was no need for a valuation of the contents as they weren’t worth much.

I think CGT can be payable if the property sells for significantly more than the IHT valuation (but IANAL).

When DM died, we got one valuation from the local EA (they could also do a Red Book valuation if necessary) and our probate solicitor recommended putting in a valuation to reflect what the house would have achieved in a buoyant market at the time of DM’s death.

The EA was absolutely spot on - we sold it for exactly the valuation.

Are you selling the house? Is IHT due?

implication of change in value depends on whther IHT was paid in the first place
INCREASE
If IHT was already paid, then HMRC has "ascertained" the probate value used in the IHT calculation and therefore a subsequent higher actual sale price results in a CGT liability
who pays the CGT depends on whether the sale is in the name of the estate or in the beneficary name(s)
"ascertained" means HMRC had formally agreed the probate valuation. What level of checking it did is a matter for them. But that is where an IHT declaration supported by a professional (red book) valuation has the credibility to reduce the chance HMRC will try to find their value by getting a VOA valuer to do their own version. If they do, as I previously mentioned, you have to go to tribunal to overturn a VOA figure.

If no IHT was paid then CGT liability arises and HMRC will reject any attempt at replacing the declared probate value with a higher price as that would reduce the CGT due given no IHT was paid anyway

DECREASE
If IHT was paid then , subject to certain conditions you can seek to replace the probate with actual sale price and then reclaim the "overpaid" IHT

If no IHT was paid then a decrease does not give a GCT liability as no gain was made so there is nothing to do

this probably explains it better than my attempt above
IHTM33026 - Loss on sale of land: procedures: claims to substitute a higher sale value within three years of death - HMRC internal manual - GOV.UK

We paid for a valuation specifically for IHT purposes (SE England) - we got a couple of quotes for the valuation and there wasn't much difference. It was NOT cheap and frankly if I'd known what information they'd base the report validation on - I could have easily done the same thing. It was money for old rope.

If the home is fairly standard for the area, with no unusual features, and similar-ish homes have been sold in the area within the last five years, or so - I'd just make an educated guess and keep a record of your sources for reaching that valuation. It is what i'd do, if the situation arose again for me.

I agree to an extent, but if IHT is due then HMRC is more motivated to check the basis of any valuation and hence the "professional" valuation is expensive as it should carry more credibility than a few DIY screenshots and, if you negotiated its cost astutely, also allow for representation at a Tribunal to argue it out (if applicable).

I didn't have any kind of valuation on DMs house, I just gave my own estimate. However the estate was well below IHT level and I rang the IHT people first to run it past them.

HMRC will always get the VOA to do a desktop check of the declared probate value and accept that as declared if there is no IHT at stake anyway,.

All they are interested in is whether the value is grossly overstated and therefore might reduce any future CGT. If your value is vaguely within the bounds of the house price index for that location then they won't care about the odd ten grand