How to Value a Property for Probate

Valuing a property correctly is one of the most important tasks an executor faces. Get it wrong and HMRC may raise a formal challenge, delaying the administration and potentially resulting in extra tax, interest, and penalties. This guide explains the rules that apply in England and Wales, who can provide a valuation, and how to handle disputes with HMRC.

The date of death rule

All assets in an estate -- including property -- must be valued as at the date of death. It does not matter when the property is eventually sold or transferred to a beneficiary. If the deceased died in February and the property is not sold until November, you use the February value, not the November sale price.

This rule matters because property markets move. If you later sell for more than the probate value, there may be capital gains tax to pay on the gain between the probate value and the sale price. See our guide to the probate valuation date for more detail on how this affects all asset types, not just property.

What value must you report

HMRC requires the "open market value" -- the price the property might reasonably be expected to fetch if sold on the open market at the date of death, between a willing buyer and a willing seller. This is a hypothetical test: you are not reporting what it actually sold for, but what it could have sold for at that point in time.

Condition matters. If the property was in poor repair at the date of death, the valuation should reflect that. If it was vacant and had been so for some time, that may also affect the achievable price.

Who can value the property

You have two main options:

• An estate agent: most agents will provide a written probate valuation free of charge. This is the most common approach for straightforward estates. Ask for a letter confirming the open market value at the date of death, not just a selling price recommendation.
• A RICS chartered surveyor: a surveyor who is a member of the Royal Institution of Chartered Surveyors carries more professional weight. If the estate is taxable and HMRC is likely to scrutinise the figure closely, a RICS valuation provides a stronger basis for the number you report. RICS surveyors charge a fee, typically between £150 and £500 depending on the property.

There is no legal requirement to use a surveyor rather than an estate agent, but the more valuable or complex the property, the stronger the case for professional involvement.

How HMRC checks property valuations

HMRC takes property valuations seriously because property is often the largest single asset in an estate. If the estate is above the inheritance tax threshold, HMRC may refer the valuation to the Valuation Office Agency (VOA) -- a government body that assesses whether the figure reported is realistic.

The VOA will look at comparable sold prices in the area around the date of death, drawing on Land Registry data and other sources. If they conclude that the property was worth more than the figure reported, they will write to you proposing a higher value. This is not unusual and does not mean you have done anything wrong.

How to build a robust valuation

Whether you use an estate agent or a RICS surveyor, the methodology they should apply is the same: look at comparable properties that sold close to the date of death. Sources include:

• Land Registry sold prices (available free at gov.uk)
• Rightmove and Zoopla "sold prices" sections
• Local estate agent knowledge of what similar properties were actually achieving

The valuer should adjust for differences in size, condition, location within the street or development, and any unusual features. Keep records of the comparables used -- if HMRC queries the figure, you will need to justify it.

Challenging a VOA valuation

If the VOA proposes a higher value than you reported, you do not have to accept it. You can:

1. Provide additional evidence of comparable sales that support your original figure
2. Negotiate with the VOA district valuer directly -- in practice, many challenges result in a compromise figure somewhere between the original and the VOA's proposal
3. Appeal formally if you cannot reach agreement -- this goes to the First-tier Tribunal

In most cases, a well-supported valuation that genuinely reflects market conditions at the date of death will withstand scrutiny. The VOA is not trying to inflate values arbitrarily -- they are checking that estates are not understating taxable assets.

Joint ownership: what to include

If the deceased owned a property jointly with another person, the treatment depends on how they held it:

• Joint tenants: the deceased's interest passes automatically to the surviving owner outside the estate. You do not include the full property value, but you may still need to report it on the IHT forms. See our guide to joint tenants vs tenants in common for how this affects the estate.
• Tenants in common: each owner holds a defined share. Only the deceased's share is included in the estate. If the property is worth £400,000 and the deceased held a 50% share, the estate value is £200,000 for that property.

When valuing a share held as tenant in common, HMRC may accept a discount on the proportionate open market value -- typically 10--15% -- to reflect the practical difficulty of selling a part-share. This is a matter of negotiation and depends on the circumstances.

More complex situations

Some property interests are harder to value and you should take professional advice in these cases:

• Life interests: if the deceased had a right to live in a property but did not own it outright, actuarial tables and specialist valuations are needed
• Deferred interests or trust interests: the valuation depends on the trust deed and applicable law
• Properties subject to a mortgage: the mortgage is a liability of the estate, not a reduction in the property's gross value -- both are reported separately

What to do with the figure

Once you have the property valuation, you report it on the inheritance tax return: form IHT205 for estates not requiring a full account, or IHT400 for taxable estates. The property's value feeds into the overall calculation of whether inheritance tax is due and, if so, how much. Our guide to inheritance tax explains how the threshold and reliefs apply.

If you later sell the property for more than the probate value, you may need to report a gain to HMRC. Our guide to selling property during probate covers what to expect at that stage.