To determine property value with the cost approach, what does the appraiser subtract from the reproduction/replacement cost?

In the cost approach to property valuation, the appraiser estimates the reproduction or replacement cost of the subject property and then deducts accrued depreciation to arrive at the final value. Accrued depreciation represents the loss in value due to various factors, such as physical wear and tear, functional obsolescence, or external obsolescence. By subtracting accrued depreciation from the replacement cost, the appraiser arrives at a more accurate indication of the property's current market value, reflecting its condition and any negative influences that may have affected its worth.

Understanding this process is critical for accurate appraisal, as it allows appraisers to consider the real-world impact of depreciation on the property’s value. Other options, such as capitalized income or comparables from other properties, while they may relate to different appraisal methods or considerations, do not directly pertain to the cost approach method itself. The method centers around replacement costs and the assessment of depreciation specifically, making the deduction of accrued depreciation necessary for an accurate valuation.