# Property undervalued for probate. Sold for 50% more. Big CGT bill



## Farmboy (8 Nov 2019)

An estate agent valued a property for probate.  The value was accepted by the Probate Office and by Revenue.  The property was sold immediately after grant of probate with no improvement or change of circumstances.  The price achieved was 50% above the valuation.  This turned out to be because the estate agent used agricultural value only.  But the property was an essential requirement of the County Council for its Development Plan dating back six years before the date of death.  The County Council was the buyer.  The estate agent did not consider the relevance of the property to the Development Plan in the valuation.

Revenue decided CGT was due on the 50% by which the sale price exceeded the valuation.

A complaint about the estate agent to the IPAV was rejected as it was not a regulatory body, only a membership body.  A complaint to the PSRA was rejected as valuation was not a matter regulated under the PSRA legislation.

How can the estate agent be called to account for making a valuation for probate which did not take into account an overwhelmingly significant influence on the true value of the property?


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## Palerider (8 Nov 2019)

They can't, it was a valuation, their opinion on a given day.

Who were the executors, are you one.


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## Farmboy (9 Nov 2019)

Unfortunately I am not an executor.  A brother and sister were.  The estate was divided between the five of us.  The executors take the view it couldn't be helped.  But it could as the property could have been put on the market pending Probate with the sale price being used as the Probate Valuation and Probate then fast-tracked to let the sale close.  The Probate Office offers this facility.  Their solicitor did not advise them this was a possible route.

So I'm trying to hold the estate agent to account for the undervaluation caused by ignoring or not being aware of the County Development Plan.  Revenue said they rely on an estate agent valuation and apply tax accordingly.

Yes, IPAV has told me that an estate agent valuation is merely an opinion.  But Revenue takes it as an absolute guide to their decisions as they're not in the business of second guessing a 'professional' valuation.


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## john luc (11 Nov 2019)

A common occurrence is this. Be interested to see how you get on with this.


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## cremeegg (11 Nov 2019)

A crystal clear instance of professional opinions being legally worthless. You just have to suck it up.

Did the EA refer to the county development plan in his report, if not he should have.

If you send the EA a solicitors letter threatening to sue for your loss and  threaten to report the matter to his professional indemnity insurers you will have his full attention.

He will probably ignore that, then all you can do is sue or not, but I doubt it would be a wise move.


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## llgon (11 Nov 2019)

Farmboy said:


> The executors take the view it couldn't be helped.





Farmboy said:


> So I'm trying to hold the estate agent to account



You were a third party to this transaction.  Even if there is a case to be made against the estate agent I don't see how you are in a position to make a complaint against her.  

You are also unhappy with the advice given to the executors by their solicitor. Are you considering making a complaint yourself to the Law Society about this?

Your complaint appears better directed towards the executors.


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## Thirsty (11 Nov 2019)

But hold on a minute - even with the CGT, you still received a bigger cheque with the higher sale price.

Would you have preferred the property to have sold for the lower figure?


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## Brendan Burgess (12 Nov 2019)

I wonder would Revenue revisit this? 

Did you speak to a tax advisor? 

If a genuine error had been made in the valuation which appears to be the case, then they might consider it. 

This happens a fair bit.  To keep CAT down, the valuer keeps the value down. But then the estate gets hit  with a CGT bill. 

Brendan


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## cremeegg (12 Nov 2019)

Thirsty said:


> But hold on a minute - even with the CGT, you still received a bigger cheque with the higher sale price.
> 
> Would you have preferred the property to have sold for the lower figure?



Thats hardly the point. If the EA had gotten it right the OP would have had no CGT tax bill


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## NoRegretsCoyote (12 Nov 2019)

67% of a small number is still better than 100% of nothing.


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## Brendan Burgess (12 Nov 2019)

some of you are missing the point here. 

The OP was going to get the market price for the site anyway, irrespective of the valuer's valuation.

By getting the value wrong, the OP ended up with a tax bill which he would not otherwise have had to pay. 

Brendan


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## john luc (12 Nov 2019)

Thirsty said:


> But hold on a minute - even with the CGT, you still received a bigger cheque with the higher sale price.
> 
> Would you have preferred the property to have sold for the lower figure?


This response falls into the view that the taxman is something to be deferred to and is an honourable institute. When someone leaves somebody an inheritance they don't think,hymm must think of the taxman too


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## Sunny (12 Nov 2019)

That is unfortunate alright. Rather than threatening the estate agent, I wonder could you ask him to admit that he based his initial valuation on incomplete information and was never a true value. I have no idea if Revenue would take this it into account but I am not sure you will have much luck going down the legal route...These valuations are usually very clear that they are just opinions and it is why some people get more than one valuation in cases like this.


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## Thirsty (12 Nov 2019)

Brendan Burgess said:


> some of you are missing the point here.
> 
> The OP was going to get the market price for the site anyway, irrespective of the valuer's valuation.
> 
> ...


Ah, right. see what you mean.


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## elcato (12 Nov 2019)

Farmboy said:


> But it could as the property could have been put on the market pending Probate with the sale price being used as the Probate Valuation and Probate then fast-tracked to let the sale close. The Probate Office offers this facility. Their solicitor did not advise them this was a possible route.


Sorry for attacking the legals here but this is the nub of your problem. Your solicitor should have advised this. In a recent personal case the first thing the solicitor advised was to wait until the property is sale agreed before applying for probate.


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## Thirsty (12 Nov 2019)

"...wait until the property is sale agreed before applying for probate. "  

In an instance for which I was executor the beneficiaries asked for the property to be put into their name so they could handle the sale themselves.  In the end it sold for  €10k less than valuation, so I don't know what happened tax wise (and they would have had to pay tax).


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## mf1 (12 Nov 2019)

For what it's worth.....

OP's strategies could be as follows:

Ask the executors to submit a Corrective Affidavit

See note from Revenue

*In which conditions should you submit a CA26?*
You should only submit a CA26 in order to amend material errors or omissions in your original CA24. It should not cover events that happened after the date of death, such as where a property’s value is reduced. Fluctuations in the property market are not considered to be material errors.

If that does not work, consider suing the Executors, for failing to achieve maximum value for the beneficiaries, who can then counter sue their solicitor, for not advising them to put the property on the market, to fix the value, prior to applying for Probate.

I think the OP is misdirecting his efforts by having a go at the EA- probably because  he does not want to go after the executors? His siblings.

mf


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## DirectDevil (14 Nov 2019)

This has the potential to turn in to a right mess.

In brief, it seems that the estate agent was negligent by providing a significantly erroneous valuation upon which the executors relied.
Are there going to be penalties and interest levied against the beneficiaries by Revenue over this ?
If so, IMHO those additional liabilities would be the basis for a proper professional indemnity claim against the estate agent.
This would be on the basis that additional penalties/interest were incurred as a direct consequence of the valuation error.

IMHO any of the beneficiaries who suffer additional penalties/interest have a stateable action against the estate agent in negligence.
Those "losses" would appear to flow directly from the negligent act.

The measure of losses is probably not going to be very high as the beneficiaries have to discharge their true liability to CGT anyhow.


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## john luc (14 Nov 2019)

Would there not be in effect double taxation. Assuming inheritance exceeds allowance then excess is taxed at 33%. If part of the sale price is first taxed as capital gain @33% then the balance is again taxed @33%


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## DirectDevil (15 Nov 2019)

john luc said:


> Would there not be in effect double taxation. Assuming inheritance exceeds allowance then excess is taxed at 33%. If part of the sale price is first taxed as capital gain @33% then the balance is again taxed @33%



I don't think that there could be a double tax liability.
The beneficiaries should only have to pay their true tax liability (plus any penalties and interest if applicable).
Conceptually, this should be the discharge of their proper tax liabilities but in two stages namely the payment of the first erroneously calculated liability and then the balance.


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## john luc (16 Nov 2019)

If the excess over probate was €100,000. The estate would have to pay 33%, €33,000. The balance, €67,000 Would be transferred to beneficiaries and they would have to pay 33% of This, €22,110. Total pay out is €55,110 instead of €33,000 If the excess was listed on the probate valuation.


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## fistophobia (16 Nov 2019)

I am facing a similar problem myself.
My sister died 6 years ago, leaving a house, no will.
I am the only relation.
I had it valued by an estate agent at date of death, and I am only getting to deal with it now.
Obviously the housing market has moved higher.
Reckon theres a 150K difference between then and now.
What date of valuation do we think Revenue will assess on it?

Thanks


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## Curlywurly (27 Dec 2019)

The Executors can file a corrective affidavit with revenue. It’s a fairly simple form CA26 sworn by the Executors. They must set out the error made on the original probate forms and back it up with a correct valuation from the same auctioneer. The auctioneer may explain how the error in valuing the property arose. It is important to note that the value of property for probate is the value as at the DATE OF DEATH and not the current value. If the beneficiaries receive over their threshold they are each liable for CAT (inheritance tax). The difference between the value of the property for probate and the Sale Price attracts CGT (capital gains tax) Both taxes are set at 30%. There is not usually a problem filing a CA26 in genuine cases such as this where it is obvious that property did not rise by 50% in Ireland in such a short space of time. Good luck and I hope you can get it sorted to your satisfaction. Nobody likes to pay TOO much tax.


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## hydrocarbon (7 Jan 2020)

Interesting thread - as a follow-up question in cases where CGT is payable (i.e. the sale price is greater than the value on date of death) can some/all of the CGT paid be set off against any CAT payable?

Case 1) Executor sells house and distributes the proceeds to a beneficiary. Is the value of this distribution reduced by any CGT paid? (For example house is valued at 400,000 on date of death. Later sold for 460,000. The gain is 60,000 and the CGT is 20,000. Thus 440,000 is distributed and used as the value of the inheritance for CAT purposes)

Case 2) Executor transfers house to beneficiary, and beneficiary then sells the house. Can any CGT paid by the beneficiary be offset against the CAT due, either to lower the value on which CAT is calculated, or as a credit against the CAT due? ("same event" relief?) I am trying to figure out if total tax paid (CGT+CAT) in case 2 would be the same as, greater than or less than case 1.


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