What term defines the reduction in value caused by the removal of a property component?

The term that defines the reduction in value caused by the removal of a property component is depreciation. Depreciation refers to the loss in value of an asset over time, and it can occur for various reasons, including physical deterioration, obsolescence, and changes in market demand.

When a component of a property is removed—such as a portion of a building, an upgrade that has been taken out, or even a significant amenity—the remaining property might lose value. This concept is important for appraisers and real estate professionals, as they need to account for this reduction when assessing the market value of a property.

The other options relate to different concepts. Valuation loss generally refers to the decrease in value as perceived by the market, but it does not specifically address loss due to the removal of components. The Principle of Contribution refers to the idea that a property's value is determined by the contribution of its individual components, rather than simply the presence of a component. Finally, the Principle of Loss does not pertain specifically to value reduction through the removal of property components.