Keep in mind these limitations, and use all the information that you have on hand. The FMV is what the appraiser thinks the equipment is actually worth and should be considered the ceiling value of the equipment.
The OLV is what the bank would get for the equipment if it repossessed it and sold it all in a fire sale. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Investing Best Accounts. Stock Market Basics. Stock Market.
Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Now that we have a better understanding of what FMV is and how it is determined, we can discuss its various uses. The FMV of a property has multiple implications. When attempting to sell a property, the FMV will determine if you should receive more or less than the market price. It may also illuminate what improvements could be made to achieve FMV.
Additionally, property tax is often based on the FMV of the property and has likely increased since its last appraisal. FMV could also impact your gift tax, estate tax, tax credit, and tax deductions after a casualty loss. If your property is included in an inheritance, for example, the heir will have to pay taxes on the FMV of the property.
On the other hand, if the property is sold, a capital gains tax may have to be paid on the difference between the sale price and the FMV. When property is damaged, insurance claims are used to cover the cost of the loss. If your property is valued below FMV and it is damaged, you will not receive appropriate compensation from your insurance company. The FMV of investment assets, such as stocks and bonds, is vital information to know before investing.
The market price of a security may be inflated or deflated compared to the FMV and will indicate if you are paying at a premium or discount for the security. Anything that can be traded, bartered or sold has a fair market value. If you are selling a used sofa, the amount a buyer is willing to pay for that piece of furniture quickly determines its fair market value.
Fair market value can be determined in other ways, including the following:. The same can be done for other assets, including coins, classic cars and jewelry. It is a matter of finding another item like yours and learning the price at which it has recently sold. Professional appraisal — A certified professional with training and experience appraising an item or property like yours can help determine the market value. For example, if you want to know the market value of a piano, hire an appraiser who works with instruments.
Third-party website valuation — Although valuations offered by third-party websites such as Zillow. These valuations will not be exact enough to use for insurance purposes, but they can offer a starting point as you begin to search for fair market value.
Averaging — The fair market value of publicly traded stock is calculated by averaging the highest and lowest selling prices of the day. In some situations, fair market value goes haywire.
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