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Treasury Department Internal Revenue Service Publication. The Cost Approach, which is the theory that the value of a property can be estimated by summing the land value and the depreciated value of improvements, is one of the most reliable and proven methods for determining real property valuations. Beyond its use as an independent method to determine property value, the cost approach presents a highly effective way to verify market and income-based valuations, project construction costs, and adjust estimates to account for unique physical property features.