Partial Interest Appraisal

[gregb]

Private party client has requested a partial interest appraisal in two 20+ unit apartment properties plus a mixed use property. I have never completed a partial interest appraisal. Owner is gifting 30% interest in the three properties to a relative. What advice besides "run" do you who have experience have?

 

[Meandering]

Are the seperate interests delineated or subdivided, or a percentage of the entire interests?

 

[gregb]

30% of each property is the gift.

 

[Meandering]

30% of what?

30% of the land?

30% of the building?

30% of the income?

30% of an undivided interest in the market value?

Like pulling teeth some days.

.

 

[gregb]

Owner is wanting to gift 30% of the interest he owns in each property to a relative. My guess would be that the client has a leased fee interest in each of the properties, that will be established if I am engaged.

 

[DWiley]

The AI book on the topic is quite good.

When I was in private practice we did these on a regular basis for estate planners. Once we established enough data to extract a market supported discount for the non-controlling interest, these became some plum assignments.

The thing that really helped us was reaching out to a local third part data provider. It turned out that even though they did not list the data in their "standard" data, they had a list of all partial interest transfers. Finding that data made all the difference in the difficulty of these assignments.

 

[CANative]

Why don't you just propose they change the assignment conditions and a appraise the property as a whole? It's going to family and all they get is a fractional interest e.g. 30% of the whole.

The various values of the fractional interest could add up to less than the whole and that would be confusing to them.

 

[DWiley]

Why don't you just propose they change the assignment conditions and a appraise the property as a whole? It's going to family and all they get is a fractional interest e.g. 30% of the whole.

The various values of the fractional interest could add up to less than the whole and that would be confusing to them.

Partial interest gifting is a common estate planning tactic. In such a case, an appraisal of the whole is not suitable if the intended use is tax documentation.

 

[Pittsburgh Pete]

Partial interest gifting is a common estate planning tactic. In such a case, an appraisal of the whole is not suitable if the intended use is tax documentation.

Just did several properties at year's end for a gentleman gifting to his grandkids. We valued the whole and left the deduction/discounting to his accountant.

 

[George Hatch]

That's what most appraisers in this region do.