Depreciation of property

Depreciation is defined as a reduction of the overall usefulness of a particular property, as well as its attractiveness for consumers by assessing its potential investor.

Thus, property deterioration and expresses a corresponding decrease in the cost parameters of the object evaluating what effect the impact of a number of specific factors within a certain time.

Operation object, of course, leads to a gradual deterioration of its parameters, which characterize the overall reliability on a constructive level of the building / construction and function of their compliance with the current and future use.

Also the value of property is determined and influenced by it, and external factors, which are caused in particular the changes that occur in the market environment, the provisions for limiting the use of the object for a particular purpose, etc.

As a rule, real estate is determined by the percentage of wear, and the cost value for the use of the building is determined by nothing other than depreciation.

number of reasons, which provoked devaluation of the object determines the appropriate types of wear, namely:

• physical wear and tear;
• functional wear;
• outer wear;

Each of these species, in turn, is divided into subtypes.

This applies in particular disposable wear, elimination of which is physically possible while simultaneously expediency from the economic side.

Economic feasibility, in turn, is to invest in carrying out specific works to improve the performance of the object through which subsequently its value will be increased.

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If found all kinds of wear defined above, here we are talking about a complex accumulated depreciation object.

The value of the total wear is determined by a difference between the detected value and the restored value of the market of a particular property to be assessed.

Based on these definitions and their essence, it can be determined that the complex accumulated depreciation is mainly in the time index of the object of life, and this, in turn, determines the additional parameters to assess its performance.

This includes already the physical life of the object, its chronological age, economic life, the effective age of the facility, as well as the remainder of the term of its economic life.