Depreciation and understand why real estate property value declines.

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Understanding depreciation on real estate property
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What does depreciation mean?
Depreciation refers to an asset's value
decreasing over time due to wear, obsolescence,
or market conditions.
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Different ways to calculate depreciation
You can use either the straight-line or the
written-down value method.
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Straight line
This method allocates equal portions of an
asset's cost over its useful life.
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Written down value
It reduces the asset value by a fixed percentage
each year, reflecting its decreasing worth over
time.
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What causes depreciation?

• Physical obsolescence, which means regular wear
  and tear of an asset
• Functional obsolescence or decreased usefulness
  due to technological advancements or changing
  requirements
• Factors like incomplete construction can lead to
  higher depreciation
• Disputes related to the property boundary, title,
  zoning, and environmental issues

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What are the exceptions to property depreciation?
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Emotions
Sentimental value with property from personal
memories and connections.
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Land shortage
Limited land supply in high-demand areas defies
property depreciation.
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Property depreciation is inevitable, but
strategies can lessen its impact.
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Let's simplify depreciation and understand why
real estate property value declines.