Depreciation is the loss in property value over time due to physical deterioration, functional obsolescence, or external factors. For property tax purposes, depreciation applies primarily to improvements (buildings) rather than land—land doesn't wear out, but structures do.
Appraisal districts account for depreciation when calculating your improvement value using the cost approach. They estimate what it would cost to rebuild your home today, then subtract depreciation to reflect its current condition and remaining useful life.
If the district isn't applying enough depreciation—valuing your aging home as if it were newer—you may be overassessed.
Depreciation is often under-applied by appraisal districts, creating protest opportunities. Your 30-year-old home shouldn't be valued like a new one.
Signs depreciation is understated:
• Your property record shows "average" or "good" condition when it needs work
• Improvement value hasn't decreased as home aged
• Cost approach value exceeds what buyers would pay
Evidence to document:
• Photos of dated features (original kitchen, old HVAC)
• Repair estimates or inspection reports
• Comparison to newer homes' values
• Functional issues (small closets, awkward layout)
Show the appraisal district what their mass appraisal model missed about your home's actual condition.
Three types of depreciation:
Physical Deterioration:
• Normal wear and tear
• Roof aging, HVAC systems wearing out
• Foundation settling, exterior weathering
• Deferred maintenance
Functional Obsolescence:
• Outdated floor plan (small bedrooms, lack of open concept)
• Single bathroom in a 4-bedroom home
• No garage in an area where garages are standard
• Outdated systems (low electrical capacity)
External (Economic) Obsolescence:
• Busy road built next to property
• Declining neighborhood
• Commercial development nearby
• Environmental issues in area
All three reduce value and should be reflected in your assessment.
Not necessarily. While buildings age, appraisal districts may not apply depreciation annually—especially if market values are rising. They might even reduce depreciation if they believe you've renovated. Check your property record card for the depreciation percentage applied.
Yes. Major updates (new roof, kitchen renovation, HVAC replacement) can reduce or remove depreciation for those components. However, if you renovate, the county may increase your improvement value. This is one reason some homeowners defer visible updates.
Photos are powerful—document dated kitchens, original bathrooms, aging systems, wear and tear. Contractor estimates for needed repairs help quantify the issues. Compare your property record card's condition rating to reality and challenge if overstated.