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Value of a 10-year-old building

Short answer

Using straight-line depreciation over 80 years with 10% scrap value, the building’s present value is Rs 1,19,81,250. Adding land value of Rs 1,50,00,000 gives a total property value of Rs 2,69,81,250 (about Rs 2.70 crore).

Calculate the value of a building built 10 years ago having a plinth area of 450 sqm, constructed in the land of 1000 sqm. Current market value of land is Rs. 15,000 per sqm and rate of building is Rs. 30,000 per sqm. Assume suitable data if necessary.

Assumptions: RCC building with a total life of 80 years; scrap value = 10% of the cost; straight-line depreciation. The rate of Rs 30,000/m² is the present rate of construction.

Land = 1000 × 15,000 = Rs 1,50,00,000

Present cost of building = 450 × 30,000 = Rs 1,35,00,000

Depreciation (straight line)

Annual depreciation=0.9×1,35,00,00080=Rs 1,51,875Depreciation for 10 years=10×1,51,875=Rs 15,18,750  (11.25%)\begin{aligned} \text{Annual depreciation} &= \frac{0.9 \times 1{,}35{,}00{,}000}{80} = Rs\ 1{,}51{,}875 \\ \text{Depreciation for 10 years} &= 10 \times 1{,}51{,}875 = Rs\ 15{,}18{,}750 \; (11.25\%) \end{aligned}

Present value of building = 1,35,00,000 − 15,18,750 = Rs 1,19,81,250

Value of property = land + building = 1,50,00,000 + 1,19,81,250 = Rs 2,69,81,250

Answer: Value of the property is about Rs 2.70 crore (Rs 2,69,81,250).

✓ Answer checked by Claude Opus 5.5 (high effort)

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