Vacancy Allowance

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A Vacancy Allowance is deducted from Potential Gross Income for current and future space that is not rented because of the lack of demand or tenant turnover.  

 

The vacancy allowance is usually estimated as a percentage of potential gross income and is based on historical collection problems or abstracted from the market.

 

It is likely that the vacancy allowance will vary with each property appraised so no set formula or percentage is appropriate.

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