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Partial Interest Buyout Calculator
Buying out a co-owner — sibling, divorcing spouse, partner — requires a defensible price. This calculator sizes the pro-rata equity, applies a minority/illiquidity discount, and compares to what the party would net in a forced sale.
common 5-20%
Buyout amount (fair)
$99,000
after minority discount
Full pro-rata equity
$110,000
before discount
If sold instead (net to party)
$92,500
Minority/illiquidity discount
$11,000
How the math works
Buying out a co-owner's interest avoids a forced sale but needs a defensible price. Start with the party's pro-rata share of equity (market value minus mortgage balance), then apply a minority discount (5-20%) for the illiquidity and lack of control in a minority position.
Divorce buyouts sometimes skip the minority discount because equitable distribution assumes 50/50 control. Partnership and inheritance buyouts typically do apply discount. Real estate appraisals and forensic accountants can support the valuation in contested buyouts.
How to Use
- Enter current market value from an appraisal or broker opinion.
- Enter mortgage balance.
- Enter the departing party's ownership percentage.
- Apply a minority/illiquidity discount (5-20% typical).
- Enter estimated selling costs to compare against a forced sale.
Frequently Asked Questions
Does a minority discount apply to divorce?
Usually no — equitable distribution typically treats each spouse as owning half. Minority discounts apply more to inherited interests, partnership buyouts, and LLC member buyouts. Consult a family law attorney for divorce specifics.
How much is a minority discount?
Generally 5-20% for illiquidity and lack of control. Higher discounts (25-35%) in commercial and LLC contexts. Depends on enforceability of co-owner rights and market for partial interests.
What if we can't agree on value?
Get an independent appraisal (both parties can retain appraisers if one isn't agreeable). If still deadlocked, partition by sale is the court-ordered fallback — forces the sale and splits proceeds. Worst outcome for both; avoid with mediation.
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