Valuation after probate

Bili

A property my late husband owned was seriously undervalued by the auctioneer I used when getting probate done a year ago. I've only just realised that if I sell it at the market rate there will be so much capital gains tax.


I think I remember reading that there is a form that can be sent into Revenue for revaluing an asset after probate - but for the life of me I can't find anything about it since - just wondering if anyone might know that the farom is called?

nompere

It's called a Corrective Affidavit, but Revenue are very resistant to them.

Here's a very good article by a firm of tax consultants that sets out the problem clearly.

http://www.ohanlontax.ie/downloads/CGTforEstatesinaRisingPropertyMarket.pdf

Mr. Incognito

If that value was used you paid CAT on that value.

If you had valued it more the CAT would have been higher.

CGT is payable out of sale proceeds and generally is better as you actually have the money which may not be the case in a will being administered.

coylemj

Mr. Incognito wrote: »

If that value was used you paid CAT on that value.

If you had valued it more the CAT would have been higher.

CGT is payable out of sale proceeds and generally is better as you actually have the money which may not be the case in a will being administered.

That was my initial thought but the OP inherited the asset from her husband so there was no CAT (unlimited threshold) regardless of the value of the asset but the notional appreciation (from the auctioneer's low valuation) since then will be subject to CGT when she sells it since the OP described it as 'a property' so we may assume it is not her principal private residence.

Bili

Thanks so much for that, I really appreciate it.

You're right - no CAT has to be paid so hopefully Revenue won't be hostile to a Corrective Affidavit.

With so much going on when my husband died I just went with the valuations I got to get probate through as quickly as possible. Naively I thought that it might be better to leave the valuation so low for when I eventually pass the property to my young child. Sadly it may have to be sold in the next five years for medical bills which is why reducing the CGT is important.

Looking back I thought that between my solicitor, ag advisor and accountant that one of them might have flagged issues like this. I'm slowly discovering other mistakes I've made, hopefully none of them ruinous.

coylemj

Bili wrote: »

You're right - no CAT has to be paid so hopefully Revenue won't be hostile to a Corrective Affidavit.

No CAT had to be paid on the inheritance as it was spouse to spouse but your only possible motivation for seeking to retroactively lower the probate valuation is to reduce your CGT liability on a sale of the property. Which the Revenue will suspect you intended to do in the short or near term. So they will have every reason to resist the application.

Sorry to be negative but that comment above is a blinkered view of the situation.

wowy

In the event of an inheritance by a spouse (for which no CAT is payable by the inheritor), I understood that it was the original acquisition cost of the asset incurred by the deceased is what is used to determine CGT liability upon disposal by the inheritor. If that's the case, then the valuation already lodged with the probate doesn't matter as it won't be used anyway to determine CGT later.

coylemj

wowy wrote: »

In the event of an inheritance by a spouse (for which no CAT is payable by the inheritor), I understood that it was the original acquisition cost of the asset incurred by the deceased is what is used to determine CGT liability upon disposal by the inheritor. If that's the case, then the valuation already lodged with the probate doesn't matter as it won't be used anyway to determine CGT later.

That would potentially put the OP in an even worse situation because we may assume that the original acquisition cost is less than the probate valuation. So the capital gain (on which she would be liable to pay CGT) would be higher than if the probate valuation was used as her notional acquisition cost.