How to calculate rate of depreciation for building valuation?
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First, you need to determine the number of years of service life of the building, which is the estimated period over which the building is expected to remain useful. Then, you can use the following formula to calculate the rate of depreciation for the building:
Rate of Depreciation = (2 ÷ Year of Service Life) x 100
For example, if you estimate the building has a service life of 20 years, then the rate of depreciation would be calculated as:
Rate of Depreciation = (2 ÷ 20) x 100 = 10%