Fractional Interest Discounts and Real Estate Complexity

June 29, 2023

Navigating real estate complexities requires trust, professionalism, and comprehensive valuations. Valbridge Property Advisors | Orlando | Tampa | Jacksonville provides these through our extensive experience, robust database of over a decade of real estate data, and expertise in retrospective values.

Our services offer unique insights, particularly in delivering accurate fractional interest discounts. The IRS permits these discounts when an entity holds less than a 100% interest in real estate. These discounts reflect the challenges associated with limited control and marketability of these ownership interests.

Such fractional interests can exist in various entities, including general partnerships (GP), limited partnerships (LP), limited liability companies (LLC), tenants in common (TIC), and undivided interests. These discounts often apply during gifting of a fractional interest or upon the death of a fractional interest owner.

Discount levels vary based on factors like the ownership entity type, ownership percentage, investment return rate, debt amount, and prevailing market conditions. We’ve handled discounts ranging from 15% to 67%, with the majority between 25% to 35%. Each interest requires valuation based on its specific merits.

The IRS mandates a “qualified appraisal” by a “qualified appraiser” for fractional interest discount determination. As the largest independent commercial real estate valuation firm in the U.S., Valbridge Property Advisors stands prepared to meet this need. Our proprietary national database of fractional interest sales and our network of over 70 offices nationwide allow us to manage large estates effectively. Our rigorous appraisals ensure your estate filings can withstand IRS scrutiny.

Alongside fractional and date of death valuations, we offer appraisal services for lending, litigation, estate planning, right-of-way, and property appraisals. Our local market knowledge and long-standing database enable us to provide accurate valuations for all commercial property types.

Samples of solutions for our clients include:
  • 709 Gifting Tax Filing
  • 706 Estate Tax Filing
  • Buyout of Ownership Interest
  • Dispute Resolution
Our clients include:
  • Attorneys
  • Accountants
  • Trust Companies
  • Bank Trust Departments
  • Estate Executors or Heirs
  • Fiduciaries
  • Owners & Investors

For all your real estate needs, rely on our expertise and commitment to service. Contact us for an appraisal consultation or a quote at 844-822-7825 (extension 1).

Trust Valbridge Property Advisors | Orlando | Tampa | Jacksonville to simplify real estate complexities with our professional service, underpinned by our rich historical property data and understanding of fractional interest discounts.

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Valbridge welcomes single-property assignments as well as portfolio, multi-market and other bulk-property engagements.

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