How to value a house for probate

If the gross value of the estate is likely to be less than £250,000 (before debts and inheritance tax exemptions/reliefs have been taken off), there is no need to obtain an accurate valuation of the house, according to HM Revenue & Customs guidance.

In this case, an estimate based on information available will suffice. This could be based on similar local properties which were recently sold, taking into account the condition of the deceased’s property.

Larger estates: formal probate valuation

For any estate likely to exceed £250,000 (gross), particularly taxable estates, a formal written probate valuation of the house is strongly recommended, bearing in mind that the house tends to be an estate’s most significant asset and that HM Revenue & Customs frequently challenges house values (see below).

The valuation should be undertaken by an estate agent or surveyor. It should be a “probate valuation”, which is an open market valuation at the date of death (not the date at which the property is inspected).

It is important that the valuation is in writing and – in the case of taxable estates – it should be submitted to HM Revenue & Customs along with the inheritance tax account (IHT400).

Local estate agents tend to make this sort of valuation relatively frequently. They will need access to the property and will charge a fee. Sometimes an arrangement can be made if the agent is to be instructed to place the property on the market.

Challenges from HM Revenue & Customs

In tax year 2010/11, HM Revenue & Customs challenged around 10,000 valuations of property in taxable estates. It has extensive powers, even resulting in penalties on top of the extra tax due.

Needless to say, for taxable estates, it is important to obtain a formal written probate valuation of all properties in the estate.