Market value is the estimated value of a given good, defined by the Public Power. It is very applied in relation to real estate, and is used as a basis for calculating some taxes and other fees paid by citizens.
The value is a calculation basis, so it does not correspond to the real value of the asset. For this reason, it is also called market reference value.
Among the most common taxes that have the market value of the property as a basis for calculation are the Property Tax and Urban Territorial (IPTU) and the Real Estate Transfer Tax (ITBI), a tax paid when a property is acquired.
How to calculate the market value?
The calculation of the market value takes into account several factors, such as:
- The area of the property.
- The standard residential unit value, which is defined according to the city where the property is located.
- The age of the property.
- The location of the property's address, in which area of the city the property is located.
- Some features of the property, such as improvements and renovations that added value to the property.
Calculating the market value is not simple. All these characteristics are analyzed by the Government and their values are multiplied. The final result of this calculation corresponds to the market value of the property.
Another important point is that the market value of properties is calculated in different ways for residential and non-residential properties (such as commercial offices and stores).
Difference between market value and real value
The market value is different from the real value of the good (or market value), which is its estimated market value, at which it can be traded and sold.
However, it is common that in the real estate market, the market value is used as a basis for calculating the final sale value of a property. In relation to the real estate market, the market value can represent the minimum value at which a property should be sold.
See also the meaning of value.
Market value of vehicles
As with real estate, automobiles also have a market value, which is also used to calculate a tax: the Motor Vehicle Property Tax (IPVA).
But, unlike what happens with real estate, the market value of a car is equivalent to its market value, that is, of its sale value.
In the case of automobiles, the market value is calculated by the State Treasury Department. The commercial value corresponds to the value registered in the purchase document.
For used cars, the sales value is equivalent to the market price analyzed in September of each year.
Also read about taxes. IPTU and VAT.