Valuation for probate: go high or low?

T McGibney said:
That's eminently untrue.
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Let's agree to disagree. What's fair for me won't be fair for a buyer and vice versa.

How do I put a fair negative value on a boundary problem, a right of residence that could be released in a moment or never, a dormant loss-making business that could be theoretically revived? All in a very small market (less than one similar property per year)? Some places sell quickly and others, like these, can take years. The valuers were the first to say this and that's why they ask what value I had in mind.
 
zuinig said:
Let's agree to disagree. What's fair for me won't be fair for a buyer and vice versa.

How do I put a fair negative value on a boundary problem, a right of residence that could be released in a moment or never, a dormant loss-making business that could be theoretically revived? All in a very small market (less than one similar property per year)? Some places sell quickly and others, like these, can take years. The valuers were the first to say this and that's why they ask what value I had in mind.
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The better professional valuers have files filled to bursting with comparative property valuations that they use as a baseline for the valuations they perform. It isn't an exact science but it isn't remotely random either.
 
zuinig said:
Let's agree to disagree. What's fair for me won't be fair for a buyer and vice versa.
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The market value is defined as the price a property would fetch on sale in the open market, assuming a willing buyer and a willing seller. The fact that you might think that price was unfair and wouldn't offer it is irrelevant; all that matters is that somebody would offer it.

Valuers are quite capable of factoring in the effect on market price of an issue such as a boundary dispute or a right reserved to a third party. I'm not saying it's an exact science; valuers might suggest a range rather than a single value; and different valuers might have a different opinion as to what the range might. But all that means is that the market value is hard to determine with precision (without actually putting the property to auction); not that "there's no such thing" as a fair market value.
 
T McGibney said:
The better professional valuers have files filled to bursting with comparative property valuations that they use as a baseline for the valuations they perform. It isn't an exact science but it isn't remotely random either.
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Unfortunately the valuers found their files rather bare when they looked for comparable property. Especially when they considered the factors I mentioned.
I had the same experience with the Valuation Tribunal when they looked at "comparable" businesses and they chose the best one in the market and asserted that any competently run business would achieve the same results as the best in the market.
Not arguing, just relating my experience.
 
TomEdison said:
The market value is defined as the price a property would fetch on sale in the open market, assuming a willing buyer and a willing seller. The fact that you might think that price was unfair and wouldn't offer it is irrelevant; all that matters is that somebody would offer it.

Valuers are quite capable of factoring in the effect on market price of an issue such as a boundary dispute or a right reserved to a third party. I'm not saying it's an exact science; valuers might suggest a range rather than a single value; and different valuers might have a different opinion as to what the range might. But all that means is that the market value is hard to determine with precision (without actually putting the property to auction); not that "there's no such thing" as a fair market value.
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I know what the definition of fair market value is. I said that there is no such thing as a "fair" market value for assets like these, not that there is no such thing as fair market value. Quotes are there for a reason.

Like you say these things fall in a range. I asked people's experience about the end of the range to choose to avoid a disadvantageous situation whereby I would pay the same tax twice. The impulsive response I got suggested I just wanted to cheat and that I should use something of magical objectivity whose name suggested its honest, definitive, non-system-gaming nature: fair market value. If there were some Black-Scholes equation for property in rural Ireland then that would be great. But there isn't.
 
zuinig said:
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".
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The issue for the rabbit hole we have ended up down is that you heard that thetr are circumstances that you may end up paying an unfair amount of CAT and CGT and you think that the valuation will impact this
I dont know what circumstances this refers to and I suspect no-one else on this thread does either, so its not possible to give practical advice.
 
zuinig said:
The first solicitor I spoke to about this said to get two valuations and pick the higher one to "avoid exposure to CGT".
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I know an executor of an estate who was recently told exactly this by the solicitor.

There was advice given as well about massaging a farm valuation to avail of agricultural relief.
 
Dr Strangelove said:
I know an executor of an estate who was recently told exactly this by the solicitor.

There was advice given as well about massaging a farm valuation to avail of agricultural relief.
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Inflating the valuation of a farm or business pays big dividends because of the 90% relief. You pay so much less CAT and then the CGT is based on the full amount of the probate valuation (not 10%) so you win big when you sell. It's gaming the system!
There was something in the news recently about rich folks buying farms big enough so that their beneficiaries would satisfy the 80% agricultural asset test and therefore game the system and win big. The government is trying to change the rules on this and there was pushback by farmers. Not fair!

www.independent.ie

Call for €10m cap on farm inheritance tax relief as Government shelves plan to clampdown on rich investors buying up land

A €10m cap on Agricultural Relief, similar to the Capital Gains Tax limit, would achieve a "farm better outcome” than the changes proposed in the Budget and would not impact the vast majority of farm families", according to a leading farm succession consultant.
www.independent.ie www.independent.ie
 
zuinig said:
Inflating the valuation of a farm or business pays big dividends because of the 90% relief. You pay so much less CAT and then the CGT is based on the full amount of the probate valuation (not 10%) so you win big when you sell. It's gaming the system!
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Do you not think that Revenue can and do spot inflated valuations when such a valuable relief is at stake?
 
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T McGibney said:
Do you not think that Revenue can and do spot inflated valuations when such a valuable relief is at stake?
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Of course I agree they'll look for this.
But it depends on how "inflated" it is from "fair" market value and how "professional" the valuer was. The whole thing is just so subjective and illogical. In the 1980's the government was introducing a Farm Tax scheme to give every piece of land a notional value, just like the old rates on houses. At least it was transparent and you knew in advance what your property would be worth in advance of its being taxed. Other countries have well-developed versions of this so your valuation is an ongoing process and you don't get surprised come CAT and CGT events.
 
When you ultimately sell the property you’ve been left, you’ll pay CGT on the difference between what you sell it for and the valuation originally stated on the probate application.

The higher the valuation on the probate application, the less you’ll pay on eventual disposal by way of CGT. This would be beneficial if the total value of the inheritance, even with an exaggerated property valuation, was still within the inheritance tax thresholds which of course vary depending your relationship to the deceased.

If you know you’re going to be liable to inheritance tax anyway, a higher probate valuation will mean you pay more inheritance tax than you otherwise would. But you might save some CGT down the line on disposal.

Any benefit to you of going this route would be dependent on a number of variables including the property’s future value and any future changes to CGT provisions.

As you’ve said, you’re liable one way or the other.
 
rustbucket said:
Yep I guess you could. You could also take the median value if the higher or lower one is skewed.

Facepalm for me I guess
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OK, let's say you do that and find yourself in a year's under Revenue Audit. You hand them three valuations, one at or close to the valuation you've used, a higher one and a lower one. Let's say they respond by selecting either the higher or lower one, and saying to you that they consider this to be the most appropriate of the three valuations, and the one that should exclusively be relied upon, thus producing a result that is disadvantageous to you.

How do you respond? You've literally given them evidence to disprove your own case.
 
T McGibney said:
OK, let's say you do that and find yourself in a year's under Revenue Audit. You hand them three valuations, one at or close to the valuation you've used, a higher one and a lower one. Let's say they respond by selecting either the higher or lower one, and saying to you that they consider this to be the most appropriate of the three valuations, and the one that should exclusively be relied upon, thus producing a result that is disadvantageous to you.

How do you respond? You've literally given them evidence to disprove your own case.
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Excuse my ignorance in relation to revenue audits. Is the valuation not submitted for probate. Revenue comes later once sales completed or for CAT purposes

Taking an average or median of three independent registered valuers approximate valuation seems logical to me. Seems like a fair effort to reflect a fair and true market valuation at date of death. Irrespective of whichever you choose you submit paperwork from the valuer to back up your claim.

Again I’m ignorant in relation to revenue audits but why would you submit to revenue All three valuations, two which you potentially have not used.
 
rustbucket said:
Again I’m ignorant in relation to revenue audits but why would you submit to revenue All three valuations, two which you potentially have not used.
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Come on, don't insult my intelligence.

If you have a material figure in your tax return (be that an income or capital tax return under any particular tax head), you're literally legally obliged to demonstrate how you arrived at that figure, and it is in your own interest to defend it.
 
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