How much does a property valuation for probate cost?
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After someone dies, the probate process must be granted so the estate can be divided amongst the beneficiaries – but before this happens the estate must be valued, calculated and reported to HMRC.
The cost of a probate valuation will depend on the service and method you choose, but on average you can expect to pay around 1% to 5% of the estate’s total value.
The probate valuation cost will be agreed upon at the beginning of the service, and with most estate agency services, they will include it within their fee.
What is a property probate valuation?
When someone dies, the legal process of arranging their assets is called probate, which is usually carried out by the executors of will following the wishes of the deceased person.
The Grant of Representation or Grant of Probate, allows the executor to gain access to all documents to calculate the value the deceased’s assets, including:
Bank accounts.
Stocks & shares.
Any property or homes.
Items within the property.
If someone dies without providing a will, or suggestions for how their estate is dealt with, then the Rules of Intestacy must be followed.
How is a property valued for probate?
Similarly to item valuations; the property probate valuation will be undertaken from the day of death (otherwise known as date of death valuation), where values are realistically generated from selling prices on the open market.
If a person died on the 25th June, but the house valuation is taking place on the 4th July, then the selling prices would need to be based on the 25th June valuations.
What is a date of death valuation?
Date of death valuations can be fairly tricky within the probate world because if someone dies during a peak within the property market, but then in following months there is a trough in the market, then the date of death valuation will be significantly higher than the achievable end figure.
If HMRC deem a probate property to be undervalued, then they may impose additional tax liability which will cause the amount payable to be far greater than the house is correctly valued.
How does Capital Gains Tax work with date of death valuations?
However much the property value increases after the date of death valuation to when it is sold, is how much Capital Gains Tax is calculated. When a beneficiary inherits the value of the estate, they will pay CGT on the value increase from the date of death to when it is sold.
How do you get a property valuation for probate?
Because inheritance tax is a legal requirement on probate property by the HMRC, getting a professional valuation within six months of the person dying, is vital. You need to ensure that you are paying the right level of tax on the property.
Getting a property probate valuation is pretty simple, you just need to contact a local estate agent, chartered surveyor or probate solicitor to carry out a valuation for you.
Technically, if you are already in the process of selling your property via an estate agent, then this conversation should have already been spoken about.
However, if you do not want to deal with the hassle of estate agents, then you could sell to us! We are leading cash buyers and can buy properties for cash in as little as seven days.
What’s the difference between probate and market valuation?
A market valuation is estimated using current market trends, similar sold properties, the properties condition and location whereas, a probate property valuation is calculated so the HMRC can calculate inheritance tax on the property.
How much does a probate valuation cost?
How much a probate valuation costs, will largely depend on whether you are using an estate agent, solicitor or surveyor to carry out the property probate valuation.
If you would like to find out more information, you can either read below or on the District Valuer Services (DVS) website.
Estate agent probate valuations
Most estate agents wont charge the property probate valuation fee as it’s naturally part of the service, but some agencies will charge a low fee (usually below 1% of the property value).
However, this will only occur if the property is below the £325,000 inheritance tax threshold and/or on small-medium sized residential properties.
Solicitor valuation
Specialist probate solicitors in the United Kingdom will charge between 2% and 5% of the estate’s total value (+VAT). The general rule of thumb is that the more experienced a solicitor is, the higher the charge rate.
Here is a table showing how much you may have to pay:
| Fee % | £100,000 | £150,000 | £250,000 | £500,000 |
|---|---|---|---|---|
| 1% | £1,000 | £1,500 | £2,500 | £5,000 |
| 2.5% | £2,500 | £3,750 | £6,250 | £12,500 |
| 5% | £5,000 | £7,500 | £12,500 | £25,000 |
Surveyor’s valuation
Surveyors are the most recommended type of probate valuation, especially if they are registered with the Royal Institution of Chartered Surveyors (RICS) as they will provide the most accurate valuation.
Most Chartered surveyors will charge between £150 and £800.
According to the Inheritance Tax Act of 1984, paying the appropriate and accurate tax on probate properties is a legal requirement. Which is why, getting the most accurate probate valuation is necessary.
Do you have to pay Capital Gains Tax on probate property?
However much the property value increases after the date of death valuation to when it is sold, is how much Capital Gains Tax is calculated. When a beneficiary inherits the value of the estate, they will pay CGT on the value increase from the date of death to when it is sold.
Do I need an official house valuation for probate?
When applying for probate, one key requirement is determining the value of the deceased’s estate. This includes valuing any properties that are part of the estate, such as their home or other buildings.
The accurate valuation of these properties is vital, as it forms part of the overall report used to calculate how much Inheritance Tax may be due. An incorrect valuation could result in higher tax liabilities, particularly in cases where the deceased was a widow, or if the property was intended to be passed down to children.
Ensuring precision here helps avoid potential disputes with HMRC and ensures you are prepared for any tax obligations.
How can Inheritance Tax affect probate?
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who has passed away. In the UK, there is usually no Inheritance Tax to pay if the value of the estate is below £325,000.
Similarly, if the estate’s value above £325,000 is left to a spouse, civil partner, a charity or an amateur sports club, it may also be exempt from Inheritance Tax.
However, if the estate exceeds this threshold and is being passed to beneficiaries other than a spouse or civil partner, Inheritance Tax may apply. The accuracy of the property valuation, therefore, plays an important role in determining how much tax must be paid.
Why an accurate house valuation is important
To avoid potential miscalculations and ensure you’re fully compliant, it is strongly advised to get an official house valuation from a trusted RICS-registered surveyor. According to HMRC guidelines, if the estate is valued at more than £325,000, a professional property valuation by a chartered surveyor is required.
For estates below this threshold, or where the entire estate is being passed to a spouse or civil partner, an informal valuation may be sufficient. This could involve getting an estimate from a reputable estate agent, many of whom provide free valuations, especially for properties they are selling. However, these informal valuations may not be accepted in all situations, so it’s advisable to consider a formal valuation if there is any doubt.
For estates subject to probate, a “Red Book” valuation is generally needed. A red book valuation refers to a valuation that follows the standards set out by the RICS valuation global standards, commonly known as the Red Book.
This document ensures that all property valuations meet a rigorous and professional standard. Any valuation carried out by an RICS-registered surveyor is considered a Red Book valuation.
By obtaining a Red Book valuation, you not only guarantee the accuracy of the property’s value but also safeguard yourself against potential challenges or investigations by HMRC. This formal process is especially important when higher estate values or potential tax liabilities are involved.
What influences a probate valuation cost?
Probate valuations can be carried out with two different methods; informal and formal valuations.
Informal probate valuations are usually low on cost, or cost-free and are part of an estate agent service. The informal valuations will apply to regular residential properties or properties that don’t attract inheritance tax.
Formal probate valuations apply to properties with inheritance tax, and will typically cost more than an informal probate valuation. This is because the valuation report is far more in-depth and covers commercial properties or land with development potential.
Other influences on a property probate valuation cost, include:
Type of property
Valuation charges are often far higher on commercial properties and properties above the inheritance tax threshold because of the precautions required to meet HMRC valuation requirements.
If the property is a leasehold, let out, under tenancy or has rent payable then this could also affect the valuation cost.
Complexity of the estate
The more extensive an estate is, the higher the valuation will be as there will be numerous assets, properties, investments and business interests which require more resources to evaluate.
Qualifications
Estate agents are the cheapest property probate valuation options available.
Whereas, a service like a professional surveyor may take far longer to conduct a formal valuation of a property and tend to charge more for their qualifications.
Taxes & finances
Probate specialists will calculate taxes, debts, revenues, and other fees attached to the probate property.
They will also investigate if the deceased person was a joint owner of the property — if so, then only their portion of the property would be calculated.
Probate valuation costs FAQs
Do you need to obtain a professional valuation for probate purposes?
You will need to obtain a formal valuation, but it can either be a formal or informal valuation — meaning by an estate agent, surveyor or probate solicitor.
How to find a RICS valuation near me?
To find a Royal Institute of Chartered Surveyors valuation near you, all you need to do is google it and find the best google and trust pilot rated RICS approved surveyors.
Who pays for probate valuations?
If you are using an estate agent, then an informal probate valuation will be covered within the agency fee.
If you are using a professional probate surveyor or solicitor who carries out a formal valuation, then you will need to cover the fee.
Are probate valuations free?
No, probate valuations aren’t free but the cost should never be more than 1% of the deceased person’s property or their part of the estate.
Is a probate valuation lower than market value?
It depends on the market — the probate valuation is based on the day of death value of the assets, whereas when a house goes to sell at market value, the market may have increased or decreased.
So, the values need to be realistic or otherwise you may face a HMRC complaint for the property being undervalued and face penalties.
What if a property is undervalued for probate?
If the HMRC believes the probate valuation is undervaluing the property, then you may face extraordinary Inheritance Tax penalties.
How we can help
If you are looking to sell your inherited property quickly, we can take all the stress and hassle out of the process for you, by guiding you through the probate process.
We can also help you get the ball rolling, by providing you with a no-obligation cash offer, which puts you one step closer to selling the inherited property and moving on.
Although we won't be able to offer you full market value, we can ensure that the process is completely tailored to your needs and timeframes.
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