The Analysis
A Fractional Interest Is Not Worth a Pro Rata Share
A 30% undivided interest in a property is almost never worth 30% of the property's fee simple value. The discount depends on the co-ownership structure, the rights of the other owners, the practical ability to force a partition, the property type, the market, and the economic interest the holder actually controls.
Getting the discount right requires expertise in both the underlying real property value and the discount methodology appropriate to the interest being valued. An unsupported discount — or a discount applied by rote without market evidence — will not survive IRS examination or deposition. An underapplied discount can result in material overpayment of estate or gift tax.
We develop the underlying property value and apply the discount analysis in an integrated report — not a property appraisal with a number plugged into a business valuation discount table.
Engagement Types
- Tenancy-in-common (TIC) interest valuation
- Undivided interest valuation for estate tax (Form 706)
- Fractional gift interests (Form 709)
- Partition action valuation and buyout analysis
- Co-ownership dispute expert opinions
- LLC/LP real estate holding interest valuation
- Divorce / marital dissolution with partial interest assets
- Bankruptcy estate — co-owned real property
Discount Components We Analyze
- Discount for lack of control (DLOC) — co-owner rights, partition exposure
- Discount for lack of marketability (DLOM) — liquidity and transferability
- Partition discount — cost, time, and outcome uncertainty
- Management burden and co-ownership friction discounts