Definition: The cost-depreciation approach estimates value by adding land value to the current cost of improvements after deducting their accrued depreciation.
Example
Land is worth $80,000. Improvements cost $240,000 new and have $30,000 depreciation. Indicated value is $290,000.
Keep the distinction clear
The depreciation deduction applies to improvements in this calculation. Do not omit land or confuse appraisal depreciation with a tax deduction.
Related terms
Replacement Cost · Reproduction Cost · Depreciation
Keep studying
Comparable Sales: Adjustments and Weighted Values
References: California DRE: appraisal and valuation concepts
Pronunciation (US): KAWST dih-pree-shee-AY-shuhn uh-PROHCH (capitals show stress)
Pronunciation reference: Merriam-Webster
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