How to value parents house? Post Reply

[Valuation]

How do I get a fair deal on parents house?

My sister and I are the executors of my father’s estate.

He owns an expensive house, and my sister wants to buy me out of my half since she’s planning to move in. I’d prefer to sell the house and split the proceeds, but I’m unsure about a few things.

First, how do we determine the house’s value? I know we can ask estate agents, but it seems like they’re just giving an estimate. With properties sometimes selling for more than the asking price, how is that factored into the valuation?

Also, what about estate agent and lawyer fees?

Do these come out of the sale, even though we’re not paying them directly?

And finally, what about stamp duty? Do I have to pay that in this situation?

I’d really appreciate any advice or insights from people who’ve been through this process.

Thank you.

[Torcat]

Hi, I have recently been an executor for an estate. Regardless of who is buying the house you need to go through probate and need a probate value for the house. I went to 3 estate agents and got an average price, they were all very close in value anyway.

This needs to be included in the inheritance tax return.

Agents fees and solicitors fees can be paid however you choose, but you would only need these in relation to the house sale, if you are selling on the open market. If you sell to your sister, presumably you won’t be going through a conventional sale process.

Even if you sell your share to your sister, the estate will be obliged to pay any inheritance tax due.

Have you engaged a solicitor for the probate? I suggest you do so, they will be able to advise on the best way to transfer the asset to your sister. I would not advise you try and do this on your own.

[Torcat]

I should add that on the open market, if the house sells for more than its probate value, the estate needs to pay capital gains tax, if it sells for less, you can claim back IHT. Obviously if you are selling to your sister, you agree a fair price and that is the price, but this is how things are handled on the open market. As you say, things don’t always sell for the valuation price. It is tricky doing this with a sibling, you need to price it fairly, but obviously you will be saving yourself a huge amount of hassle and expense vs selling on the open market. I would advise on getting a solicitor for this though, financial things can easily lead to fallings out amongst siblings! You also need to decide how to handle the IHT between yourselves and should get legal advice on that.

[Valuation]

Thank you for clarifying the point about IHT, I had no idea that's how it worked.