In direct capitalization, which year’s income is primarily considered for valuation purposes?

In direct capitalization, the primary focus for valuation purposes is the most recent year's income. This approach emphasizes the most current financial performance of the property or business being evaluated, as it reflects the latest operational efficiency, market conditions, and revenue generation capabilities. By using the most recent year's income, appraisers can obtain a realistic snapshot of what the property is capable of producing in terms of revenue, which forms the basis for determining its value.

Using the most recent income figures helps to provide a more accurate and relevant valuation, as it incorporates the latest trends and changes in the market that could impact cash flow. This method allows appraisers to base their capitalization rates and income projections on up-to-date information, leading to a valuation that is timely and reflective of current conditions.