How to Calculate Current Market Value
Fair market value is an indicator of how much a piece of property, including real estate, vehicles and personal items, could sell for on the open market. According to the Internal Revenue Service it is the price at which property could change hands between a willing seller and a willing buyer. Market value is based on several factors and is important for determining selling price and tax status when donating property. Know the fair market value of property you are selling or donating to ensure that you receive a fair price at closing or write-off at tax time.
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Instructions
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Determine the price of the item at the time your purchased it. Refer to old receipts or closing documents. On real estate and vehicles do not include closing and title costs that were not considered part of the actual sales price.
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Add the value of upgrades, additions or permanent improvements that you completed to the property. An extra bedroom, bathroom or kitchen appliances add value to real estate above their actual cost. Refer to Zillow.com's list of home improvement values for a reliable indication of return on your improvements. Upgrade values also apply to after-market changes to vehicles; consider what you would be willing to pay for the vehicle after the upgrades.
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Check prices for similar items in your area. Use Zillow.com to check values of recently sold homes in your immediate area that closely match your home in size, quality and layout. For vehicles, refer to the Kelley Blue Book for your vehicle's make, model and year. If your donation center does not provide a receipt for property, such as clothing and furniture, check the retail prices at local thrift stores for similar second-hand items.
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Talk to a professional who has expertise about the item you are selling or donating. A real estate agent is trained to objectively calculate fair market value for homes, land and other buildings. A car dealership can often give you a trade-in value for your used vehicle. Consult a professional appraiser for expensive personal items, such as jewelry or antiques.
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Refer to the values you have found and determine an average value for your property. Set your first asking price at the higher end of the range if selling property. Use a more conservative figure near the mid-range for taxation purposes when donating property.
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Tips & Warnings
When determining a tax write-off carefully document and save your records to avoid potential audit issues later on.
References
Resources
- Photo Credit TAX TIME image by brelsbil from Fotolia.com
