What does the improved value in the cost approach not include?

The correct answer is that the improved value in the cost approach does not include land value. In the cost approach to property valuation, the overall value of an improved property is calculated by determining the cost to reproduce or replace the improvements, subtracting any depreciation, and then adding the value of the land.

When assessing the improved value, the focus is on the structures and improvements made to the land, such as buildings and other enhancements, without factoring in the underlying land itself. The reason land value is excluded from the improved value calculation is that it is considered a separate asset that retains its own intrinsic value and does not depreciate like improvements do.

In respect to the other elements, depreciated costs refer to the reduction in value of the improvements due to wear and tear, and replacement or construction costs reflect the current expense to build similar improvements. These factors are integral to calculating the total improved value, which is distinct from the land's worth, making the exclusion of land value necessary for an accurate assessment of the improved property.