Probate SA2 Form / Valuations of House and Land ?

Hello

Would anyone be able to assist us in completing the SA2 form, specifically the Valuations for land and property please (two separate assets in two locations) ? We are hoping to obtain the Grant of Probate ourselves and only get a Solicitor involved when selling and transferring titles.

My question is what happens if a house or land is sold for less than the Valuations submitted on the SA2 Form ? We understand that if sold for more than the Valuations we will have to pay more Inheritance Tax. If sold for LESS, do we have to take the loss on the chin ?

Would it be better to sell the house and land as Executor's Sales and only pay Inheritance Tax on the amounts actually achieved and consequently delay submitting the SA2 Form until we have secured buyers ?

Advice would be very much appreciated. Thank you.

You can't complete the sale until you have grant of probate.

Often what folks do is put the property on the market, get an offer and put that offer in as the valuation & then proceed from there. You need a patient buyer who is prepared to wait however.

I'm open to correction, but I believe if you value the property at 450k and it sells for 400k; you pay the inheritance tax on the 400k.

I don't see how you can be taxed on money you didn't get.

You would submit a revised SA2 with the up to date valuation

OP here. Thank you for all of your replies so far.

Yes Danny boy, you have understood my question exactly. We will be paying I.T. We are hoping that we will only have to pay I.T. on the amount we actually receive from sales and not just on an estimated Valuation received from an Auctioneer.

It would seem unfair that if the house & land were sold for higher than the Valuations on the SA2 Form we would pay the extra I.T. but if the house & land were sold for LESS that the Valuations, we would still have to pay the I.T. on monies we never actually see. No problem paying the extra I.T. if house & land achieved higher prices but it would really hurt to have to pay the extra I.T. if they sold for lower prices !

Thanks.

I think @jpd 's answer is the right one - if final sale price is lower than valuation, you submit a corrective affidavit.

DannyBoyD said:

I think @jpd 's answer is the right one - if final sale price is lower than valuation, you submit a corrective affidavit.

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Unfortunately Revenue will not accept a corrective Affidavit based on the lower sale price.
The value Revenue use to calculate inheritance tax is the value as at the date of death. This would be the same value that you inserted in the Form SA2 as all values inserted therein should reflect date of death values.
If some time had passed between date of death and issue of Grant of Probate Revenue will sometimes accept a corrective Affidavit accompanied by an official Auctioneers / Valuers valuation showing the value at date of issue of Grant.

It does seem unfair and incorrect that Revenue can charge inheritance tax on money that was not received. A relative of mine was caught in this scenario after the crash. Person died in 2007 when property was valued at its highest. Probate was extracted in same year which determined the date the inheritance tax had to be paid. House did not sell immediately due to the crash. Inheritance tax was paid by all beneficiaries by the due date ( otherwise they would have incurred penalties and interest). Due date was determined by the date the Grant of Probate issued. House sold about 18 months after for approx half the value inserted in the Revenue Affidavit ( CA24 was in use back then) This was a difference of approx €750000 at the time. All beneficiaries appealed to Revenue for refund of inheritance tax based on sale price of property. They sent numerous appeals but Revenue would not budge. They allowed them file a corrective Affidavit to show the value as at date of issue of the Grant. There was not a major difference as the Grant issued within 6 months of date of death and house prices had not taken the full hit by then. Each beneficiary (5) ended up paying approx €50000 extra in inheritance tax on money that they never received.

There is information on www.revenue.ie about the “Valuation date” used to determine when payment of inheritance tax is due. There is also information on filing Corrective Affidavits. OP should ensure he/she reads same so as not to incur any penalties etc.

Op here. Thank you for your replies. Alas Curlywurly you are correct. IT will have to be paid on the Valuation submitted at date of death even if land / house are sold for less.

I submitted the question to Revenue a number of weeks ago and have yet to receive a reply. I had planned to update this thread with the answer when received from Revenue.

I subsequently found the answer in the Guidance Notes on how to complete the SA2 Form and Curlywurly is correct in his reply.

Thank you for your replies and assistance.

Joebloggs said:

Valuation submitted at date of death even if land / house are sold for less

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So you are better off submitting a lower value then.

Its a bit of a bonkers system, paying tax on a hypothetical figure for money you never received!

At the end of the day, anyone's valuation, no matter how experienced they are, is in reality a best guess. Until the property is actually sold, you've no idea what the market value is.

DannyBoyD said:

So you are better off submitting a lower value then.

Its a bit of a bonkers system, paying tax on a hypothetical figure for money you never received!

At the end of the day, anyone's valuation, no matter how experienced they are, is in reality a best guess. Until the property is actually sold, you've no idea what the market value is.

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My understanding is that Revenue deem that the beneficiary received the inheritance either at the date of death (usually applies to jointly held assets ) or at the date the Grant of Representation issues from the Probate Office. So that is the date that determines when the CAT is due and is known as “the Valuation date “

The sale price of property has no real bearing on calculating CAT. ( Inheritance Tax )

However the sale price of property is used to determine if CGT ( Capital Gains Tax ) is payable. The property value on the “Valuation date” is the value when the beneficiary accessed the asset. The difference between the two values is the amount of the gain and is liable for CGT.

So if you submit a lower value,as you have stated, the gain could be greater. As far as I know both CAT and CGT are calculated at 33%.

I agree that it is incorrect to have to pay inheritance tax on something one never received and think this should be challenged legally by the experts. I think it is a loophole in the Revenue laws (Finance Act )

Joebloggs said:

Op here. Thank you for your replies. Alas Curlywurly you are correct. IT will have to be paid on the Valuation submitted at date of death even if land / house are sold for less.

I submitted the question to Revenue a number of weeks ago and have yet to receive a reply. I had planned to update this thread with the answer when received from Revenue.

I subsequently found the answer in the Guidance Notes on how to complete the SA2 Form and Curlywurly is correct in his reply.

Thank you for your replies and assistance.

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I think there is a facility on ROS to raise queries by email. I have found they are very quick to reply on ROS. Might be worth sending another query. For peace of mind. Good luck with the Probate process.