RGS Realty



Profits, assets, value, liability… words you often hear when it comes to investments. Investing itself is fraught with risk and fear. From mutual funds to liquid assets, gold, bonds, and land- the choices are plenty. But of the myriad opportunities available, one investment vehicle which stands above the rest, despite changing economic climates and which has withstood the economic test of time, is real estate.

Real estate is a tangible and necessary asset. To put it in its simplest form, people will always invest in land or a place to live. Also, unlike paper assets, real estate is rapidly liquidated and rarely depreciates. Well, here comes another big term – depreciation. Let’s first understand what exactly depreciation is before we move on with this blog.

What is Depreciation? 

Simply put, depreciation is the methodical decrease in the documented cost of a fixed asset over its lifespan. It represents how much of an asset’s value has been used. In real estate, depreciation refers to the reductions in the value of a real estate asset which accounts for depreciation in its value owing to the use of the asset during its lifetime.

What is Depreciation of Property?

Depreciation of property is termed as the decrease or the dip in the selling value of your home or property. It is to be noted, however, that the depreciation factor remains valid only for concrete structures and not the land. The value of land, therefore, remains the same and is benchmarked the same to the current market value. However, the cost of the construction is evaluated based on the total life of the building and its current age. Resale flats are usually sold at higher prices than the buying cost as the appreciation of the land is calculated with the value of the flat. For independent houses, on the other hand, the building component depreciates while the land is valued at market price.

What are the causes of depreciation?

In general, there are 3 main factors to be considered for the depreciation of property.

  1. The physical obsolescence of build:

Building and constructed structures undergo physical degeneration and deteriorate with time. A house recently constructed would require less maintenance than a decade-old structure. Be it in terms of upkeep for weather conditions or its durability and aesthetics. Therefore, the older the property, the more the depreciation in value, unless it is maintained well by the owner. This is also why you are advised to renovate your property before renting it out or selling it.

  • The location and infrastructure of the property:

Properties in some geographical areas depreciate faster than others. A property in a posh area will also witness relatively lesser depreciation in comparison to a rural or slum setting. Incomplete and delayed infrastructure projects also aid the depreciation of your property. Suppose your property is located away from the city, with no proper connectivity and infrastructure, or has slum tenements or cremation grounds in its vicinity. In that case, these may also impact the price of the property adversely.

  • Legal tussles with the property:

Buyers are generally vary of purchasing disputed properties or investing in assets embroiled in legal battles. However, veterans who know the way out of such tussles don’t mind investing in disputed properties, as they are available at a low price.

Why do you calculate depreciation on your property?

While the land remains valuable and does not depreciate, concrete structures degrade with time. The location plays a vital role in the appreciation and depreciation of the property value. Simultaneously, the age of construction is the critical factor when calculating the depreciating value of the property.

The depreciation of fixed assets, in general, is calculated to account for the wear and tear over time. For an independent residential property or house, the average lifespan of any building is 60 years. To calculate the depreciation of building components, you have to consider the ratio of years of construction and the total age of the building.

At RGS Realty, we build homes that give you maximum returns; in terms of the lifestyle and experiences and the financial value of your home. Our Projects- RGS Forte, Sukhwani Nysa and Sukhwani Highlands, are all located in the premise of the city, which ensures the value of your property appreciates over time. Our builds of goodness ensure you have no worries hanging when it comes to your dream home. To read more informative content on real estate and know more about us, visit https://www.rgsrealty.com/