Property Valuation
Depreciation in real estate appraisal is measured as:
AThe annual tax deduction allowed by the IRS
BA loss in value from any cause✓ Correct
CThe reduction in assessed value each year
DThe cost to repair deferred maintenance only
Explanation
In appraisal, depreciation is any loss in value from any cause—physical deterioration, functional obsolescence, or external obsolescence. It differs from tax depreciation used in income tax calculations.
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- Functional obsolescence in an appraisal refers to a loss in value due to:Property Valuation
- Physical curable depreciation in an appraisal refers to:Property Valuation
- The income approach to value is most commonly used for which type of Utah property?Property Valuation
- External obsolescence (also called economic obsolescence) is unique because it is:Property Valuation
Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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