What do we mean by the property's market value?
You should take certain precautions when you put your property for sale mostly if you take into consideration the impact on your family's assets. The first step is to establish your property's fair market value.
In general, homeowners selling their property have a tendency to overestimate its value. It is understandable in all respects if one thinks of all the work they put in their property, its sentimental value, the amount they need to fulfill a new project, etc. However, you must know that determining its market value has a major impact on the average time it will take to sell your property. Therefore, if the price is too high, this might undermine the impact of a super marketing plan and even be an obstacle to the sale.
What is the difference between the municipal assessment and the market value?
The municipal assessment is usually always lower than the market value. Also, you must remember that the municipal assessment is based on the municipality's valuation role which is normally revised every three years. Therefore, the municipal assessment amount does not reflect your property's “current” market value. It often serves as a comparison figure while not being considered when establishing a property's selling price.
As for the market value, it is based on economic factors such as similar properties sold in the district recently, the property's features, the market trends, etc. It is not always easy for homeowners selling their properties to have access to information regarding selling prices. The listings show the price that was asked for the property which is often quite different from the selling price. You should take this factor into consideration when making a personal estimate of your property's market value.
A real estate broker can give his opinion on the market value while analyzing the data collected based on his professional sources and knowledge of the sector. He can provide you with a feel of the market and guide you through the process. However, only a chartered appraiser in good standing with the Ordre des évaluateurs agréés du Québec can produce an appraisal report of the property's market value. Under certain circumstances, such a report is required. In general, this report costs approximately $500.
To get a preliminary appraisal of your property, fill out the following form.
A few facts to remember
Please note there are tax rules for sales between related persons
According to the old saying, foresight is better than hindsight. Did you know that transactions between related persons whether by blood, marriage, common-law union or adoption must be concluded according to the fair market price?* If you do not abide by this rule, the minister will charge itself of taxing the capital gain according to its own market value assessment.
The Income Tax Act does not include any definition of the market value. However, accountants and tax experts rely on the following definition broadly used within the case law's framework:
“Fair market value is the highest price, expressed in terms of money or money's worth, obtainable in an open and unrestricted market between knowledgeable, informed and prudent parties acting at arm's length, neither party being under any compulsion to transact.”
*Reference: Article 69 of the Income Tax Act (Information Circular 89-3, August 25, 1989)