Probate value is the figure placed on a deceased person’s estate for tax and reporting purposes. For a property, it is what the place would realistically have sold for on the open market on the date the owner died, not what it might fetch after improvement, or in a rising market many months later.
How probate value is assessed
- For smaller or simple estates, a written appraisal from one or more estate agents is often accepted.
- Where the estate is near or above the inheritance tax threshold, HMRC expects a formal “Red Book” valuation from a RICS surveyor, which carries far more weight if the figure is later questioned.
HMRC can and does challenge probate valuations it believes are too low, so the aim is an accurate, defensible figure rather than a convenient one.
Why it matters: two taxes
- Inheritance tax (IHT): the probate value feeds the estate’s total, which determines any IHT due (broadly 40% on the value above the available nil-rate bands).
- Capital gains tax (CGT): the probate value becomes the base cost. If beneficiaries later sell for more than that, CGT may be due on the gain.
Getting it wrong
- Undervaluing to reduce IHT can backfire. HMRC may open an enquiry, apply penalties, and revise the value upward, and a low base cost simply moves the tax to a larger CGT bill later.
- Overvaluing hands over more IHT than necessary.
Probate value vs the price you actually sell for
The eventual sale price often differs from the probate value, especially when probate drags on for many months and the market moves in between. A sale that completes close to the date of death, at or near probate value, keeps the CGT position simple, because there is little or no gain to account for.
How RPJ fits
Because we can complete quickly, a sale to us often happens close enough to the date of death that the sale price and the probate value are broadly aligned, which keeps the tax position clean. Our written offer can also serve as a documented, arm’s-length evidence point for what the property was worth. We are buyers, not valuers or tax advisers, so for anything material the estate should speak to its solicitor or an accountant.
Related
- Grant of probate: the authority needed to sell.
- Letters of administration: the equivalent where there is no will.
- Cash buyer: why a quick completion suits probate sales.