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October 17, 2011 (Regular Meeting) <br />STEP 4. <br />CALCULATE REPLACEMENT COST NEW <br />Page 744 <br />A. Replacement Cost New is the product of the effective base rate <br />times the total adjusted area calculated earlier. In the <br />sample parcel we have; <br />$68.48 x 4,125 EFF AREA = $282,480 <br />STEP 5. <br />STEP 6 <br />DETERMINE DEPRECIATION AND PERCENT CONDITION OF THE SUBJECT <br />A. Depending on the improvement type one of two methods is used. <br />In chapter 11 are the appropriate table and at the end of this <br />chapter, a further discussion of their use. <br />B. The sample parcel is an improvement type 10 with an effective <br />age of 9 years and is depreciated 13%. <br />C. To determine the percent condition, subtract the amount of <br />depreciation from 1.0. In the sample parcel, the percent <br />condition equals 1.0 - .13 = 870. <br />CALCULATE THE DEPRECIATED BUILDING VALUE <br />A. The DEPRECIATED BUILDING VALUE is the Replacement Cost New x <br />the Percent Condition in the sample parcel. <br />$282,480 x .87 = $245,758 Rounded to $245,760 <br />A. To the Depreciated Building Value is added the total <br />Depreciated OB /XF Value and Land Value. <br />B. In the sample, this is as follows: <br />$245,760 Depreciated Building Value <br />$22,240 Total Depreciated OB /XF Value <br />$300,000 Land value <br />$568,000 Total value <br />DEPRECIATION <br />Find the depreciation schedule in the Appendix for the appropriate <br />Improvement Type. For those with improvement types indicating residential <br />and /or non income use of average, below average and above average quality, <br />locate the proper exterior wall type and then record the annual and initial <br />percent depreciation rates. <br />Depreciation is calculated for each separate stage of the life cycle of an <br />improvement. The tables in the appendix have five ranges of age as columns. <br />These ages are determined differently for each improvement type and may be <br />different for each year. <br />RESIDENTIAL AND /OR NON INCOME PROPERTY depreciation is also determined in the <br />table by the row on which the exterior wall is contained. To determine the <br />total depreciation, you must calculate each age range independently. <br />For example, (assume we are using the following table): <br />DEPRECIATION SCHEDULES <br />EXTERIOR <br />WALL TYPE <br />INCREMENTAL AGING PERIODS <br />From <br />- To <br />1 -2 <br />3 -11 <br />12 -19 <br />20 -34 <br />35 & over <br />1 <br />- 4 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />5 <br />- 7 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />8 <br />-11 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />12 <br />-15 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />16 <br />-20 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />21 <br />-22 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />23 <br />-28 <br />2.00 <br />1.00 <br />1.00 <br />1.00 <br />1.00 <br />If our improvement were 24 years old, determined by subtracting the EFFECTIVE <br />AGE from the EFFECTIVE REAPPRAISAL YEAR, we find the total depreciation by <br />