How to calculate the depreciation rate of the house?

Annual depreciation rate =( 1+ expected residual rate of net profit)/expected service life × 100%.

Building depreciation is the loss of property value caused by physical factors, functional factors or economic factors.

The Trial Regulations on Depreciation of Fixed Assets of State-owned Enterprises clearly stipulates the calculation method of house depreciation expense, and the depreciation of fixed assets such as houses adopts the average life method, that is, the fixed depreciation method. Its calculation formula is:

Annual depreciation rate =( 1+ expected residual rate of net profit)/expected service life × 100%.

There are many factors to consider in determining the price of a house, such as the location of the lot where the house is located, the building area of the house, the level and orientation of the building.

Extended data:

Depreciation rate related factors

Construction cost:

(1) Construction cost is the basis of accounting depreciation expense, which consists of necessary material consumption, labor remuneration, taxes and profits in construction, and is the purchase price in housing management. It should only be the purchase price of the house itself and should not include other expenses. Because the service life of a house is as long as several decades, even hundreds of years, and the price changes greatly in such a long time, it is generally not based on its original cost, but on the monetary expenditure required for replacement, that is, rebuilding such a house under realistic conditions.

Surplus value of the house:

(2) The residual value of the house refers to the value of the building materials left after the house is demolished and cleaned after being used for a long time and losing its use value. Cleaning costs are the labor and mechanical costs paid for the demolition and cleaning of scrapped dangerous houses. As an additional cost of housing use, it should be included in the cost. Generally, the residual value after deducting the cleaning cost is the net residual value, referred to as residual value.

Service life:

(3) Service life refers to the tangible wear and tear of the physical form of the house under the action of external physical and chemical factors; Under tangible wear and tear, the number of years a house can maintain normal use is called service life. The service life is the natural life determined by the structure and quality of the house. Depreciation life is the period of residential value transfer, and it is the socially necessary average service life, or economic life, which is determined by social and economic conditions in the process of use. Depreciation life is not only related to service life, but also affected by intangible loss.

References:

Baidu Encyclopedia of Building Depreciation