Property Valuation
Depreciation in the cost approach to appraisal is defined as:
AThe IRS tax deduction for income property
BLoss in value from any cause — physical deterioration, functional obsolescence, or external obsolescence✓ Correct
CThe difference between original cost and current market value
DThe annual decrease in assessed value
Explanation
Appraisal depreciation is the loss in value from any cause, including physical deterioration (wear and tear), functional obsolescence (outdated features), and external (economic) obsolescence (outside forces). It differs from IRS tax depreciation.
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