University of Central Florida (UCF) REE3043 Fundamentals of Real Estate Practice Exam 1

The ability to depreciate land is a fundamental concept in real estate and tax law. Land is considered a non-depleting asset, meaning its value does not diminish over time due to use or wear and tear, which is a primary reason why it cannot be depreciated. Only improvements made to the land, such as buildings or other structures, may be eligible for depreciation.

In the context of this question, the statement that raw land cannot be depreciated captures this important principle. Unlike capital assets that lose value due to deterioration or obsolescence, the value of the land itself can remain stable or even appreciate over time, depending on market conditions and development potential.

While there are other options that mention scenarios involving land—such as developed land or land used for development—these do not accurately reflect the key characteristic of land regarding depreciation. Land itself, regardless of its usage or development status, is not subject to depreciation under the tax code.