In the Cost Approach, depreciation deductions account for which factors?

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Prepare for the Nova Scotia Association of Realtors Exam. Study with flashcards and multiple choice questions, each question includes hints and explanations. Get ready for your exam!

Multiple Choice

In the Cost Approach, depreciation deductions account for which factors?

Explanation:
Depreciation in the Cost Approach reflects losses in value due to aging and obsolescence of the improvements. It accounts for physical deterioration that comes with age, functional obsolescence from outdated design or inadequate features, and economic obsolescence from external factors like market conditions or zoning influences. Market trends and interest rates affect value in other ways, not the depreciation deduction itself, and zoning can cause economic obsolescence but is captured under that category. So the depreciation deduction covers age and functional or economic conditions.

Depreciation in the Cost Approach reflects losses in value due to aging and obsolescence of the improvements. It accounts for physical deterioration that comes with age, functional obsolescence from outdated design or inadequate features, and economic obsolescence from external factors like market conditions or zoning influences. Market trends and interest rates affect value in other ways, not the depreciation deduction itself, and zoning can cause economic obsolescence but is captured under that category. So the depreciation deduction covers age and functional or economic conditions.

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