What is typically NOT included in the calculation for property depreciation?

In real estate, property depreciation refers to the decrease in value of a property over time, typically due to wear and tear, economic factors, or changes in market conditions. When calculating property depreciation, land value is often excluded from the equation. This is because land is considered a non-depreciable asset; it generally does not lose value over time and may even appreciate.

In contrast, improvements, such as buildings or renovations, are subject to depreciation because their value diminishes as they age and require maintenance or replacement. Market demand can influence property value but is not a direct factor in the calculation of depreciation. Lastly, the asset lifespan is relevant as it helps determine the depreciation schedule and how long an asset can be expected to last before it needs significant repair or replacement.

Identifying land value as not included in the calculation reflects a fundamental principle in real estate—that land appreciates or maintains its value, thus distinguishing it from depreciable improvements.