What does the Principle of Surplus Productivity refer to?

The Principle of Surplus Productivity refers to the net income generated by a property after all production costs have been accounted for. This principle highlights the concept of surplus, which is essentially the profit that remains after expenses, reflecting the property’s ability to generate income beyond its operational and maintenance costs. In property valuation and assessment, understanding surplus productivity is crucial as it provides insight into the property's economic performance.

This principle is significant in real estate and taxation because it informs assessors about the potential profitability of a property, thereby influencing assessed values and tax implications.

In contrast, identifying an ideal market price or the average market price pertains to comparative market analysis, whereas the overall efficiency relates to how effectively a property utilizes its resources, but these do not specifically address the profitability aspect that surplus productivity captures.