How do you calculate the dollar depreciation (Depr) using the replacement cost new less depreciation (RCNLD)?

To calculate dollar depreciation using replacement cost new less depreciation (RCNLD), it's essential to understand the relationship between RCNLD and the overall value of the property. RCNLD provides a figure representing the cost to replace or reproduce the building, minus any depreciation that has occurred.

The correct approach to calculating dollar depreciation involves evaluating the difference between the property's sale price and its value derived from RCNLD. Specifically, once you have the RCNLD calculated, you'll want to compare it against the sale price of the property. The dollar depreciation is effectively the difference between what you can sell the property for and what the property is valued at based on its replacement cost.

By doing this, you accurately reflect how much value has diminished due to factors like physical wear and tear, functional obsolescence, or economic factors—all contributing to the depreciation of the property.

Other methods, such as directly assessing land value or applying ratios of land to building, do not provide a straightforward calculation of depreciation in the context intended, which focuses on the building and its condition relative to the current market value.