What is the remaining income after subtracting building value called in the land residual technique?

In the land residual technique, the remaining income after subtracting building value is referred to as residual income. This concept is central to income-based property valuation methods, where the overall income generated by a property is analyzed to determine the contribution of the land itself.

The land residual technique essentially posits that the total income generated from a property is composed of income attributed to both land and improvements (buildings). After determining the portion of income attributable to the buildings—which usually involves evaluating the building’s value through capitalization or another method—the remaining income is what can be attributed to the land. This remaining amount is termed 'residual income' because it reflects what remains after accounting for the costs and values associated with the improvements, highlighting the land's economic contribution separately.

Using this technique helps assessors isolate the valuation of land in contexts where property income can significantly fluctuate depending on the improvements made. This approach is particularly useful in evaluating properties where the land use is more significant than the structure built upon it, allowing for more precise assessments of land value based on its income-producing capabilities.