the accumulated depreciation is called “the capitalized cost of equity”. The capitalized cost of equity is the cost of a single lot of land in a single year multiplied by the cost of a single lot of land over the same time period.
The capitalized cost of equity can be calculated by multiplying the cost of land by the time required to develop the land. This is what we’ll do in the next section.
The good news is that the capitalized cost of equity is always the same regardless of the cost of land. The bad news is that the cost of land does change over time. The good news is that the cost of land is a lot easier to calculate when you have a budget. The bad news is that it’s incredibly hard to calculate the cost of land when there are no budgets.
The only way to calculate the cost of land is to multiply it by the number of people who own it (which is more important because we can’t just say if it’s our property or some other asset). The good news is that the cost of land is proportional to the number of people who own it.
In real estate, the cost of land equals depreciation.
So with the cost of land, you can say that every person on Earth owns it. The cost of land is proportional to the number of people who own it. A high-end home has a lot of people, but the low end of the spectrum have a lot fewer people.
The difference between a house and the amount of land it has is called the “ownership” of a property. The amount of land is the “accumulated depreciation” of a property. The amount of land is proportional to the amount of people who own the property.
For example, if you own a town that has a population of 10,000, you can say the cost of the town is $10,000. You can then say the cost of the school building is $10,000. The house and the building will then have 10% of the cost of the property.
