Capital Gains Tax (CGT) is a tax levied on the profit made from the sale of certain types of assets, including real estate, shares, and business assets. In Australia, for example, CGT is part of the income tax system, and the tax is applied to the capital gain made when an asset is sold or otherwise disposed of. The valuation of the asset is crucial in determining the capital gain and, therefore, the CGT payable.
A capital gains tax valuation is typically carried out by a professional valuer to determine the fair market value of an asset at the time of its sale, transfer, or other event that triggers CGT. The value of the asset is crucial in calculating the capital gain (the difference between the sale price and the asset’s original purchase price) and the associated tax liability.
Identify the asset and gather relevant documentation (purchase price, costs, improvements).
Assess market conditions and similar asset sales.
Apply appropriate methods: sales comparison, income, or cost approach.
The valuer issues a report with methodology and market value for CGT calculation.
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