When a loved one dies, you have a never-ending list of things to sort out, so it’s no wonder getting a house valuation for probate purposes may not be high on your agenda.
While this is perfectly understandable, the probate value for property and contents is a necessary part of this process and you will have to deal with it eventually.
So, we’ve put together a quick guide on what happens if the house sells for more than probate value, what HMRC will do, how much probate costs in the UK and more.
What happens if a house is sold for more than probate value?
If a house sells for more than probate value, HMRC could try to hike the Inheritance Tax owed, often once the sale is made following a Grant of Probate being granted.
This has been a sore point with numerous individuals who’ve experienced the probate process and, what’s more, there isn’t much help out there on the topic.
While you can dispute increases of this description by negotiating with the District Valuer, it’s an upsetting and laborious process, especially when you don’t need any more exasperation.
If the admin process isn’t prolonged and the final sale price is more than the probate value, then Capital Gains Tax becomes a big problem.
Essentially, if a property sells for more than the original valuation, you may be accountable for Capital Gains tax, too.
How much money before probate is required?
When dealing with financial affairs after a loved one dies, one of the first things that need to happen is their bank needs to be informed so their accounts can be closed – this is occasionally carried out by a Grant of Probate.
Generally, there can be between £10,000 and £15,000 in the bank before probate is required. However, this isn’t strictly true for every situation.
Typically, banks issue funds up to a specific amount, with no need for a Grant of Probate.
That said, every building society and bank comes with its own thresholds that ascertain whether or not probate is required.
In the case of a small estate where the deceased person didn’t own a property and everything is valued under £5,000, probate isn’t necessary.
Depending on how big or small the estate is, a bank will request a Grant of Probate prior to closing the deceased person’s bank account.
How much does probate cost in the UK?
The cost of probate can vary greatly, as it depends on the estate and who deals with the procedure.
The price consists of two parts: fixed costs (probate application fee) and variable costs (anything else, including hiring a specialist probate professional).
The fixed cost is usually £273 if the estate is more than £5,000, while the variable fee will probably be roughly one to five per cent of the estate’s value, as well as VAT.
However, no fee applies if the estate is £5,000 or under.
If extra copies of the probate are needed, the fee is £1.50 each, meaning the copies can be sent to various companies simultaneously.
If probate has already been arranged, it’ll cost £20 to apply again.
Get in touch with Accountants East London
We hope we’ve answered any questions you may have about what happens when a house is sold for more than probate value.
If you need further financial or accounting advice, be sure to contact Accountants East London today.