Property Valuation
What is 'depreciation' in real estate appraisal (as distinct from tax depreciation)?
AA tax deduction taken on investment property
BA loss in value from any cause, including physical deterioration, functional obsolescence, and external obsolescence✓ Correct
CThe reduction in property value due to property tax increases
DThe decrease in purchasing power of money over time
Explanation
In appraisal, depreciation is any loss in property value from any cause — physical deterioration (wear and age), functional obsolescence (outdated design), or external/economic obsolescence (outside factors).
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