Valuation for probate: go high or low?

Z

zuinig

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I'm about to submit a probate application and there's property involved that has to be valued. People tell me it's better to go with a high valuation in order to save on CGT down the road. I'm not sure exactly why.

We intend to hold on to the property for a few years before selling and we'll probably sell piecemeal: land, business premises, site, house (none of these is fantastically valuable and won't be quick to sell). If we take lower valuation then we save much-needed cash by paying less CAT. When we sell CGT will be based off of the probate valuation so in the end the State gets its 33% no matter what.

However I've reading that there can be a case where you can be levied CAT on the full sale price of an asset and CGT on the difference between the sale price and the probate valuation. It doesn't seem logical that you can pay twice but I turned up a presentation where some specialist addresses this and advises a high probate valuation. What I don't get is in what circumstances can Revenue levy CAT *and* CGT on an asset sale.

I understand that you want a higher valuation to use up your CAT threshold fully but with the properties in question they'll all be over that amount anyway.
 
ClubMan said:
It's simpler, more compliant, and less likely to create issues later on to get a fair market valuation (which will always involve some amount of subjectivity) rather than trying to game the system.
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What makes you think I'm trying to game the system? What exactly did I say that gives the impression I am trying to avoid paying the required tax?
 
Revenue states that CAT and CGT are calculated differently.

This guy (https://lawlorpartners.ie/about-us/cathal-lawlor/) says in a recent presentation that because of this difference you can end up paying *both* CAT and CGT on an increase in value of an inherited property in certain circumstances. The first solicitor I spoke to about this said to get two valuations and pick the higher one to "avoid exposure to CGT".
 
zuinig said:
What makes you think I'm trying to game the system? What exactly did I say that gives the impression I am trying to avoid paying the required tax?
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zuinig said:
I'm about to submit a probate application and there's property involved that has to be valued. People tell me it's better to go with a high valuation in order to save on CGT down the road. I'm not sure exactly why.
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@ClubMan I guess I don't understand your cryptic answer but I fail to see why you think I am gaming a system that can not be gamed when I am paying all tax due.
 
T McGibney said:
This advice sounds crazy. How many tax returns does this person prepare each year?
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I don't know and that's why we decided not to use him. He wasn't transparent about anything.

I've had valuations done and the valuers tended to be optimistic for the same, vague reason about avoiding CGT later. But they also agreed that the uncertainty of any value is high. One property has a boundary problem and the valuer said it would be un-mortgageable and next to unsellable as is. Another one will have rights of residence attached. They're all likely going to be hard for us to sell but this is just so subjective. That's why I ask about the risk of having too low a valuation.
 
zuinig said:
@ClubMan I guess I don't understand your cryptic answer but I fail to see why you think I am gaming a system that can not be gamed when I am paying all tax due.
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I'll try again...
zuinig said:
I'm about to submit a probate application and there's property involved that has to be valued. People tell me it's better to go with a high valuation in order to save on CGT down the road. I'm not sure exactly why.
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ClubMan said:
I'll try again...
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Thank you for your incredible patience.

Now I'll try again...

You highlighted this: People tell me it's better to go with a high valuation in order to save on CGT down the road. I'm not sure exactly why.

How is that trying to game the system? I'm told something and I ask why I would be told that. I am paying all tax due: CAT and, eventually, CGT. Cathal Lawlor says that in certain cases (not clearly defined) both CAT *and* CGT can be levied on the increase in value of an asset during probate and he advises a higher initial valuation to avoid this. Is it "gaming the system" if you try to avoid paying the same thing twice? Do you regularly pay your taxes twice?
 
None of that negates that fact that for capital taxes purposes Revenue expect and you are required to establish a fair market value of an asset and not some artificially inflated or depressed one in an attempt to game what tax is due.
 
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ClubMan said:
None of that negates that fact that for capital taxes purposes Revenue expect and you are required to establish a fair market value of an asset and not some artificially inflated or depressed one in an attempt to game what tax is due.
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Who is doing this "artificial inflation..."? Perhaps you could give me a fair market values on properties with boundary issues, rights of residence, etc. All without consulting solicitors, barristers or actuaries.

And if CAT+CGT is a constant how would increasing one and decreasing the other "game what tax is due"?
 
zuinig said:
Who is doing this "artificial inflation..."? Perhaps you could give me a fair market values on properties with boundary issues, rights of residence, etc. All without consulting solicitors, barristers or actuaries.
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Ask a professional valuer who will, if necessary, stand over their valuation with Revenue or, if it came to it, in court.
 
ClubMan said:
Ask a professional valuer who will, if necessary, stand over their valuation with Revenue or, if it came to it, in court.
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I did.
Twice.
There's no such thing as a "fair" market value for assets like these. But that's not what I asked about.
And I'm not gaming any system and I am absolutely not looking to evade a single penny of due tax and such insinuations are offensive.
 
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