A deceased estate must be valued for inheritance tax purposes before there can be any question of dividing up the assets. This article explains how to value a house, and contents because these often make up a significant part of any estate.
It is worth mentioning that unjustifiably low values bring down the amount of estate tax due, and paid. In this case the executor or administrator could be personally liable, if there were an investigation followed by an unfavourable finding.
Before You Value a House and Contents for Probate
The value of any asset is the price it might reasonably have achieved on an open market on the day of the deceased’s death. Therefore we are speaking here of the realistic selling price, not the insurance value.
There are two ways to value a house and contents for inheritance tax purposes:
1…Obtain informal estimates from several knowledgeable persons and take the average value.
2… Pay an acknowledged expert to investigate, and write a formal report justifying their conclusions.
One Critically Important Thing to Remember
The value of the house must be determined according to the Royal Institute of Chartered Surveyors (RICS) ‘Red Book’ guidelines. The valuer must sight title deeds before checking for any covenants, easements, or planning permissions that may affect the value.
HM Revenue and Customs will commission an independent, second valuation if any tax may be due on the estate. If the two valuations disagree, then the two valuers will have to negotiate a compromise value for the purposes of probate.
How to Value the Contents of a House in Practice
When you value a house and contents of a deceased estate in UK, you may find placing value on loose contents the more complex of the two. That’s because the heirs could have subjective opinions of value based on emotional attachments. Moreover, contents also form part of the estate for inheritance tax purposes and must be fairly valued.
‘House Contents’ for probate purposes includes all the deceased’s personal assets (excluding financial investments and perhaps digital items). Therefore, the executor must inquire whether there are any possessions in safekeeping with friends or family, or in safe custody. The deceased may have left notes with their will about this.
Personal possessions often include the following although there are inevitably exceptions:
- Vehicles for example cars, boats, airplanes, motorcycles and other transport.
- Collectibles such as jewellery, silverware, art, coins, postage stamps etc.
- Furniture, whether modern pieces, classic, antique, bespoke or hand made.
- Electrical gadgets and appliances, electronic devices, and digital equipment.
- Clothing and any other loose gear that is neither unique nor of special value.
Create a spreadsheet listing the contents and their location as a first step to valuing the contents of the house.
It is worth noting that collectible personal possession can be worth more than we imagine. Jeffrey Avery of Avery Associates has providing valuations of house contents, chattels and property for probate for many years. Our service extends to estate duty strategy, selling at auction, rental agreements and private treaty sales.
How to Value the Contents of a House for Probate
First, check whether you have found all the contents to value. You need to be careful at this stage of valuing a house and its contents, because strangers could soon arrive and start clearing the place. Older people especially tuck treasured possessions away in unlikely places. Don’t overlook the cellar, attic and outbuildings.
Compare what you found with any items listed in the will, or mentioned by family and friends. This could be a suitable moment to change the locks on the doors.
1… It is advisable to use a professional valuer even if there is public information available about an item. For example, used car resale values are listed on innumerable websites.
2… To protect yourself it is wise to use professional services even if you estimate the total estate value at less than £1,500. Accuracy is crucial to avoid HM Revenue and Customs asking for further details. That’s why Avery Associates photograph the household contents as means of proof and due diligence.
3… Any antiques, works of art, jewellery, or other collectables worth £1500 individually must be listed seperately in the report. You will need a written report from a professional valuer for these.
One-Stop-Shop for Valuation and House Clearance
Avery Associates values property and household contents not limited to deceased estates. We also offer a related house clearance service, including auction services of more valuable items, disposal, delivery to charity shops and so on. We introduced this at the request of clients seeking a responsible service and would be delighted to assist.
This truly is a ‘one stop shop’ for all things relating to probate valuations and clearance. Jeffrey is a ‘facilitator’ and full marks to him for finding a niche market all those years back. Adam and Paul did a sterling job in clearing my late brother’s property and with good humour too.
Jeffrey valued the contents and arranged a RICS Surveyor to carry out a ‘Red Book’ valuation. Job done! During the entire process, I was kept informed. Thank you so much. I live 100 miles away from the property and I needn’t have worried. Everything went according to Jeffrey’s plan! I warmly recommend them. J Schon
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