Why do I need a Valuation?

Jessica Bound, Chartered Surveyor at MMP Rural Department explains why farmers and rural property owners will need a property valuation at some point during their lifetime for a variety of reasons, not just when they want to buy or sell.

Inheritance Tax

For Inheritance tax planning and probate its advised that a formal Red Book Valuation is carried out. This type of valuation is detailed and investigations on the land registry title, planning constraints and the identification of agricultural and non-agricultural value is considered which help qualify for Agricultural Property Relief or Business Property Relief.

Although this type of valuation can be more costly initially, it can help you avoid unnecessary expenditure in the long term as the report is far more likely to stand up to any scrutiny from HMRC than a standard market appraisal with 1 in 4 cases currently being investigated.

A Red Book Valuation may also reduce your inheritance tax liabilities. With Inheritance tax rates at 40% once any nil-rate thresholds and reliefs have been used, obtaining a justified valuation is the safest way to ensure you don’t pay more tax than necessary.

We appreciate that gifting property in your lifetime can be difficult for many reasons, but a valuation with additional consideration about possible reliefs can help identify assets that could exacerbate tax, allowing us to deal with them in a way that you can control. If well planned, this can reduce disagreements within the family and reduce the risk of unexpected surprises.

Capital Gains Tax

Capital gains tax may be payable when you are ‘disposing of’ a property that has increased in value. Your tax obligations are calculated on your gains rather than the selling price. If your gain (minus allowances) once added to your taxable income is within the basic Income Tax band you'll pay 10% on your gains (or 18% on residential property).

Often calculating any gains are straightforward but in many cases an experienced valuer is essential to reduce tax liability and avoid penalties. For instance:

• The property was sold under market value to benefit the buyer.
• The property was acquired before 31st March 1982
• The property is given away or passed onto a family member
• You are selling an inherited property.
• You are selling a gifted property.

Bank and Secured Lending

To invest in property or to diversity your business, mortgage lenders and loan companies will need a valuation of your property in the RICS Red Book format. This will advise your bank on the value of the property and any defects which might affect its security for the purposes of the loan. 

Furthermore, Morris Marshall & Poole are the leading Agricultural Mortgage Corporation (AMC) agent in Wales meaning we can provide a valuation and tailored funding advice to support most rural business activities.

There are many other instances where valuations are essential, such as divorce,  transferring assets into a SIPP or compulsory purchase cases.  Our professional and helpful RICS Registered Valuers and Chartered Surveyors can offer expert valuation advice across the residential, commercial and rural sectors.

For further information please contact Jess on the details below.