Valuing and selling a property that is part of an estate

When someone has passed away, it can be difficult to know where to begin. Having to deal with all the details regarding a deceased person’s estate is probably not what you want to be doing at this difficult time. To make things easier for you in this difficult situation, we have produced a guide with information designed to help you when you need to apply for a deed of title for an estate or sell a property that is part of an estate.

What is an estate?

An estate is the sum of a deceased person’s assets and liabilities. An estate includes items such as property, money and other valuable objects such as jewellery and furniture. When a person passes away, it is the heirs (usually one or several family members) who are required to manage the deceased person’s estate.

When selling assets that are part of an estate, the first step is to perform an estate inventory. An estate inventory is a list of the deceased person’s possessions, as well as any liabilities, and functions as the estate’s verification in terms of showing who has the right to represent and act on behalf of the estate. In order to be able to perform a valid estate inventory, all parties to the estate must be present during a formal estate inventory procedure.

What does distribution of an estate entail?

Distribution of an estate can take place as soon as the estate inventory has been completed. Distribution of an estate means that the assets in the estate change ownership after conclusion of all agreements and contracts and repayment of any mortgages and loans. If there is more than one heir involved, details of each heir’s inheritance must be documented in a succession certificate. You can engage the services of a lawyer to assist you if you do not wish to or do not feel capable of preparing the succession certificate. It is important that all heirs sign the succession certificate and that it is then stored in a secure location. The succession certificate does not need to be sent anywhere but instead acts as proof of the agreement reached between all parties to the estate.

Valuing an estate

When a distribution of an estate and division of property takes place, the property in the estate is valued on the basis of market value. The latent tax liability, estimated selling expenses and potential deferred tax are then deducted from the market value to arrive at a fair value for the property. The latent tax liability is an estimate of the capital gains tax that would have been payable if the property had been sold.

Notar’s professional and experienced estate agents can assist you with your property valuation needs when it comes time to sell an estate.

Selling an estate prior to an estate inventory

When you wish to sell property that is part of an estate, an estate inventory needs to have been completed. It is still possible to sell the property prior to completion of the estate inventory, however, in such a situation the buyer will not be able to take possession of the property until registration of the estate inventory has been finalised. Registration of the estate inventory is necessary in order for the buyer’s deed of title to be approved.

Selling a property that is part of an estate

In order to be able to sell a property that is part of an estate, all parties to the estate must approve the sale. This applies if there is no will that specifies what is to be done with the property in question. If all parties to the estate are agreed on the sale of the property, it is necessary to apply for a deed of title and then contact an estate agent for a valuation. If, on the other hand, there is a will that specifies who is to inherit the property in question, there is no need for all parties to the estate to reach agreement on what is to be done with the property. Instead, this decision rests solely with the person who is to inherit the property according to the deceased person’s will.

Selling a tenant-owner apartment that is part of an estate

In order to be able to sell a tenant-owner apartment that is part of an estate, all parties to the estate must, as a general rule, agree to the sale. However, apartments or tenant-owner apartments that are part of an estate may be sold without the consent of all parties to the estate, as opposed to houses and villas, which require all parties to agree to the sale. In order to be able to carry out such a sale of a tenant-owner apartment that is part of an estate, application must be made via a district court for the assistance of an estate administrator. The sale may then be carried out if the estate administrator determines that the tenant-owner apartment should be sold.

Tax implications of selling a property that is part of an estate

When a property that is part of an estate is sold for a profit, you become liable to pay tax on the profit. The same tax rules usually apply to the sale of a property that is part of an estate as the rules that apply when private individuals sell a property. The sale must be declared for tax purposes in the year following the year in which the property is sold, so you need to set aside money to cover the tax payable on the sale. If the property is not sold within three years, the tax rules become more stringent.

Please don’t hesitate to contact us here at Notar if you would like more information regarding the valuation and sale of property that is part of an estate. We would be pleased to provide you with a free valuation of a house or tenant-owner apartment, without any commitment or obligation on your part to sell the property in question.