What is the cost approach to property valuation?

The cost approach estimates property value by calculating the cost to build a new replacement structure, subtracting accrued depreciation, and adding the value of the land. It is most reliable for new or nearly new construction, unique properties like churches and schools that rarely sell, and insurance purposes. The formula is reproduction or replacement cost minus depreciation plus land value equals property value. Reproduction cost replicates the exact structure with the same materials, while replacement cost builds an equivalent structure using modern materials and methods.