Can I change probate value after sale?

[LauraS]

Hello all - I'd really appreciate some clear advice if at all possible. I've posted this in the inheritance tax forum but it has occurred to me that people who read this form might be better placed to advise.

My mum passed away in early October 2017, leaving her daughters her semi-detached home. At the time we had it valued by two local estate agents for probate - we were pretty certain it wouldn't go near IHT thresholds, and we were right. It was valued at £250,000 which we registered for probate.

Fast-forward five months to March 2018, when we had the property valued for the market. These valuations came in at between £330 - 360K, and it has subsequently just completed on a sale of £340K.

Obviously there is a clear, significant discrepancy between the valuation at death and valuation at the point of going to market (March) and sale - an increase of over 35% in five months, with no work other than maintenance under-taken on the property in the intervening period. We still aren't liable for inheritance tax, but we do now have a CGT bill. We think the change in property value is so significant as to make us want to query the original valuation and, if appropriate, change it.

My question is - can we do this, and if so, how would we go about it?

Many thanks in advance for any advice you can give.

[maths]

As there was no IHT due on the deceased's estate this means that the market value of the house at the date of death has not been "ascertained" for CGT. This means that the value is not yet fixed in stone.

As a consequence, in computing any CGT on any gain on sale you will need a professional valuation as at date of death if you want to argue that the £250,000 was wrong.

[LauraS]

Thank you - we're currently getting the estate agent that sold the house to give us their estimation of what they would have been marketing it for in October last year using the data they have at hand - the market as a whole in the area for similar properties has increased by 2-3% over the last year, but not 35% in 5 months.

If this estate agent indicates that the valuation was signicantly under, how do we talk to HMRC about this?

And thank you again!

[maths]

You don't talk to HMRC as such.

Assuming the estate requires completion of SA 900/SA 905 (i.e. a complex estate) any capital gain and CGT liability will be shown thereon. You could then add comments in relevant Boxes.

[LauraS]

Thank you! This is incredibly helpful. No - it's an incredibly simple estate. She had £5K in the bank (which has been used on administration) and the house - that was it.

We did give the valuation to HMRC using the IHT205 form in October - the house was the main asset so the threshold of £425,000 applied (as I understand it), so we didn't report any IHT. Obviously we are still below the threshold.

As we weren't planning on completing the complex estate form, is there anything else we should report the change to? It feels strange that we reported the value as £250,000 in October, sell it for £340,000 a few months later and don't say anything to anyone about why we haven't filed a CGT return.

[maths]

According to HMRC guidance the estate would seem prima facie to be a complex estate.

However, if the only transaction was the sale of the property I would have thought that on completion of the administration that the executors should provide a CGT computation to HMRC and any CGT paid.

Before doing so it you would need to be clear as to the property's market value at date of death; an estate agent's informal valuation may not be acceptable. HMRC may want sight of any valuation upon which you wish to rely.

[LauraS]

Thank you. The guidance is sending me in circles.

So - I’m going to assume that we’d need a RICS evaluation if we think the initial estate agents evaluation at probate was significantly off (which we do).

Thank you again - it’s been very helpful to get your take on this.