What Is a Partial Interest?  A partial interest (or fractional/undivided partial interest) refers to owning less than 100% of a property—such as a 25% share in a home. Because you don’t control the entire asset, this interest typically carries a discounted value when sold or transferred.

Why a Discount Applies: Three main factors cause partial interests to be worth less than a proportional share:

1.       Lack of Control
You cannot unilaterally manage, sell, or refinance the property.

2.       Reduced Marketability
It’s harder to find buyers interested in owning just part of a property, especially outside of family or closely-held situations.

3.       Legal & Administrative Burdens
Shared ownership increases the potential for disputes, adding financial and legal complexity.

Common Scenarios

• Lifetime Gift or Sale to Family Members
  Parents transferring 10–49% interests to children often see discounts of 20–40%, depending on control and liquidity.
• Estate Transfers
  When an heir inherits an interest, a discount is often required for accurate tax reporting—even without control or marketability.
• Divorce or Partnership Buyouts
  One party may value their share lower if they hold a non-controlling interest.

How Partial‑Interest Valuation Works

1.       Establish Market Value
We begin with a full, fee-simple market value for the entire property.

2.       Determine Fractional Ownership
Identify the precise percentage being valued (e.g., 25%).

3.       Assess Discount Factors
We evaluate control issues, marketability, number of owners, and case law to arrive at a defensible discount rate.

4.       Calculate the Value
Example:

o    Full market value: $10 million

o    25% interest = $2.5 million

o    If a 35% discount applies → $2.5M × (1 – 0.35) = $1.625 million

Why Choose Abba Appraisal?

• IRS‑Compliant Valuations
  We follow accepted methods and relevant case law to support your tax filings and filings upon gifting or inheritance.
• Decades of Appraisal Expertise
  With over 30 years serving individual, family, and fiduciary clients, we understand the practical and emotional complexities of partial-interest transfers.
• Clear, Transparent Reporting
  Our appraisal reports clearly document ownership share, market data, discount justification, and applicable laws—making it easy for accountants and trusts to use.

Typical Discount Ranges

• Controlling Interests (over 50%) → Minor to no discount (0–10%)
• Non‑controlling Interests (1–49%) → Substantial discount (20–50%), depending on context

Need to transfer, gift, or defend a fractional interest? Let’s connect—our personalized approach ensures your valuation is accurate, credible, and legally sound.