The appraiser applies a capitalization rate to an income comparison of similar properties. Which method is used to measure depreciation?

The correct answer pertains to the capitalization of income and relates specifically to evaluating the potential income a property can generate. The capitalized value method measures depreciation by determining the present worth of future income streams from the property. When appraisers apply a capitalization rate to income, they assess how much future income can be expected from a property in present value terms.

By using the capitalized value approach, appraisers can estimate the loss in value or depreciation based on the expected income the property can generate over time. This method allows appraisers to evaluate how various factors, such as property age, condition, and market conditions, can impact the property's overall worth in terms of potential income.

In contrast, options like cost of repair focus on the expenses needed to bring a property back to its original condition, which measures physical deterioration rather than the impact on income generation. Market extraction relates to deriving property value from actual sale data of similar properties, often used in the sales comparison approach, and cost approach analysis quantifies value by summing land value and depreciation from physical improvements. Thus, these methods do not specifically target the income aspect for measuring depreciation as the capitalized value method does.