When calculating depreciation, which component is not typically considered?

In the context of real property appraisal, depreciation refers to the reduction in value of an asset over time due to factors like wear and tear, obsolescence, or changes in market demand. When calculating depreciation for a property, the components that are usually considered include the actual age of the property, the cost to construct or acquire the property when it was new, and the total useful life left for the property.

Land value is not considered in depreciation calculations because land typically does not depreciate in the same way buildings or improvements do. Instead, land is seen as a stable asset that may appreciate over time due to market demand, location, and other external factors. In appraisal practices, the value of land is assessed separately from the structures built upon it, as improvements can undergo physical deterioration or functional obsolescence while the underlying land remains relatively unchanged. Therefore, omitting land value is appropriate when calculating depreciation, as it focuses specifically on the improvement aspect of the property.