How Do You Calculate Fair Market Value?
Determining the fair market price is crucial when selling or buying property, as well as when donating property to charity and requesting tax deductions. In all cases, the first step in determining a fair price depends on how the fair market value was calculated. Fair market value is the maximum and minimum price that an individual or business is willing to pay for an item or service. Knowing how to calculate fair market value is critical in setting business budgets, managing taxes and making successful business deals. Understand the difference between fair market price and fair market value. A fair market price is the price you set for an item after calculating its current market value. According to the United States Internal Revenue Service, fair market value is the “price that property would sell for on the open market.” Consider all the factors that can influence the item’s value, such as its scarcity and use. There is no set formula or spreadsheet to calculate an absolute market v
