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Where Taxpayers and Advisers Meet

IHT - difference between RICS house valuation and sale price

david66
Posts:16
Joined:Fri Jan 22, 2021 7:03 pm
IHT - difference between RICS house valuation and sale price

Postby david66 » Fri Jan 29, 2021 7:29 pm

Hi,

Please can someone help with this issue. I am getting a RICS person to value my recently deceased parents property in order to fill in the IHT 400 form and then sell the house. My questions is, as the property is a little unusual in its location, it maybe difficult to value accurately. If the house sells for substantially more or less than the valuation, how is this handled? I had read that as long as the property is valued near the date of death by member of RICS, any variation in sale price is a CGT issue and the IHT remains the same? Is this correct?

Many thanks in advance.

L

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT - difference between RICS house valuation and sale price

Postby maths » Sun Jan 31, 2021 10:34 pm

A valuation by an RICS for probate purposes is acceptable.

Should the property sell at a later date for "substantially" more than value at death a "Corrective Account" would need to be filed.

If sold for less, then it may be possible to make a claim to substitute the lower value for probate purposes.

HMRC state:

"The value of a house in the estate at death has been agreed with the Valuation Office at £100,000. An application for clearance has been received and issued to the personal representatives (IHTM05012) in respect of the assets for which they are liable. The personal representatives then sell the house for £120,000 and offer to pay inheritance tax on the increased price. You should politely refuse the taxpayer’s offer as the value has been agreed and is covered by the clearance certificate that has been issued.

The exception to this rule is where you believe that the taxpayer may have failed to disclose a material fact (IHTM40143) affecting the valuation of the asset before the certificate was issued.

Decrease in value
If the taxpayer claims that the value of any assets in the estate should be decreased you should deal with their claim on its merits whether or not a certificate has been issued at that title".

david66
Posts:16
Joined:Fri Jan 22, 2021 7:03 pm

Re: IHT - difference between RICS house valuation and sale price

Postby david66 » Mon Feb 01, 2021 10:20 am

Thanks. So the CGT advice I was given was incorrect?


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