Definition of "Property Depreciation"

Jim Peters real estate agent

Written by

Jim Peterselite badge icon

Jim R. Peters Real Estate- Windermere Homes and Estates

To depreciate is to lose value for something. Depreciation is the act of losing worth.

Connecting with real estate, Property depreciation can be both an accounting method typically used to assess the decrease of value of something stretched over time in order to reduce taxable income without reducing cash, or the simple fact of an asset losing its value due to time and usage.

Was that vague? Well, then let’s go deep and get metaphysical here: only change is constant in life. That means that everything is changing from moment to moment. Could you say that a car you bought for $100,000 10 years ago, a  vehicle that stayed days and days in direct sunlight, endured rain, a few bumps, plus extensive family use and a lot of miles of usage … is still worth $100,000?

Of course not.

That’s why you see a lot of collectors that do not take toys out of their box. It’s a way to conserve value; the moment the toy is out of the box, the moment the car is out of the dealership, the moment the house gets build… the property depreciation clock starts to run. To some extent, maintenance may partially arrest or offset wear and deterioration but - because defining “value” requires a comprehensive approach - technical obsolescence of its materials and technology might also come into play.

In the end, property depreciation and depreciation as a whole is the culmination of the understanding that the more you use things, the more they lose their worth. In a capitalist society where productivity is everything, it might be a harsh concept, but a very necessary one. Now - since not all things are worth the same and some things take its toll earlier (or later) than others – property depreciation is to be read as more of a concept or convention, than a pragmatic universal calculation. Property depreciation needs to be calculated considering a lot of factors. In real estate and elsewhere. But the main idea is thinking about the asset’s usage lifespan and calculating its curve of value throughout it.

Real Estate Tip:

Is property depreciation common? Yes! And the longer you try to sell your house without a real estate agent the bigger the property depreciation of your property becomes! Time is money! Don't wait to find out the hard way what happens when a property starts to depreciate! Search The OFFICIAL Real Estate Agent Directory ® find a local real estate agent and get that money!

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Sponsor sells interest to real estate investors in one property only. The total amount received from the equity investors is used by the sponsor to buy the property for the partnership. ...

Legal obligation to pay taxes associated with owning property or earning income. For example, a real estate owner must pay property taxes. ...

Degree of completion or accomplishment such as a home that is 70% completed. Condition of real property. Position of an item. Legal standing such as of a case. ...

Properties that about and actually touch and share a common border. Properties B and C are contiguous. Property A is adjacent to properties B and C, but it is not contiguous. ...

“What is Situs?”, you ask.Situs is a word in Latin that basically means the site or location where something exists or originates. Like most words in latin, situs is usually ...

Map presented to a municipality's planning agency by a real estate developer for consideration and approval. ...

Allocating common or central costs to each unit of property. An example is assigning to each owner of an apartment based on the number of rooms occupied the cost incurred by the landlord to ...

When we think of rural property or rural real estate, most of us think of farms, properties with large areas designated to agricultural land. That’s how rural communities generally ...

Under a FHA-insured mortgage, both the property and the borrower must meet certain minimum standards. The borrower is charged an insurance fee of one-half percent on the unpaid balance and ...

Popular Real Estate Questions