If you need gift of equity and you already have market value and sales price, this calculator does the substitution for you. It suits a quick check, a homework answer you want to confirm, or any figure you need to sanity test.
What Is the Gift of Equity Calculator?
The gift of equity calculator takes market value and sales price and turns them into gift of equity.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the Gift of Equity Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with market value set to 10, sales price set to 5, the calculator returns gift of equity of 5. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out gift of equity?
Enter market value and sales price. The calculator then works through the relationship and reports gift of equity.
What does the gift of equity actually calculate?
It takes market value and sales price and converts them into gift of equity using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter market value?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Why does a small change in one value move the answer so much?
That happens when an output depends on a ratio, because dividing by a small number magnifies any change in it. Check the units first, then check whether the value you entered is in the range the relationship was designed for.
Do I have to fill in every field?
Only the fields a particular result depends on. If you leave one blank, the results that need it simply show a note instead of a number, and everything else still works.