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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 10399
Experience:  I have been practising for 30 years.
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My Mother died March this year and the two beneficiaries are

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My Mother died March this year and the two beneficiaries are her two sons who are joint executors. My Brother wanted to do probate himself without using a solicitor, and , the property was valued at £425000. The value was supported by similar properties in this area that had recently sold.
Probate has been granted and we are dealing with the estate and want to sell the house. I feel that my brother and the estate agent have missed a trick and I think the property has more potential than they can see due to it's large garden and being on a corner plot. If we can find the right person for this house I feel it could make in the region of £600000 and I have indeed found an agent willing to give it a go,
My question is if we are lucky enough to attain this price there is a considerable difference from probate valuation, all be it I can see how the valuation has been arrived at and clearly no intention to under value, I just feel we could be lucky!!! How would we deal with the difference? Is it a Capital Gains Tax liability or do we have to go back to probate? or should we sit on the property for a period of time say 3 years before selling? Clearly one wants to do the best .

Provided you can satisfy any enquiry from the Revenue that the probate valuation of the property was correct and it was simply an unintended oversight that it had more potential or someone came along and saw the potential and decided to offer an obscene amount of money for it or, for example, the property went to auction and everyone saw this potential and it sold for an obscene amount of money, then there is no problem with it.

These departments in the revenue however do speak to each other and this kind of thing is on their radar and hence, if you sell the property for £600,000, six months after it was valued for £425,000, the revenue are going to want to know why. At this stage of course, you don’t know whether the property is going to sell for £600,000 or at all.

In cases like this, I would write to the revenue stamp office and get a definitive answer from them because they are the ones who after all enforce any alleged underpayment of tax. I can tell you however that they are likely to simply say it’s an underpayment of tax and they want a chunk of money.

The safest way therefore would be to sit on it for a period of time and then bite the bullet on the capital gain. Of course, the beneficiaries and the executors have to be in agreement with this.

Can I clarify anything arising from this?

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