If the remaining economic life of a property is 40 years, what is the recapture rate?

To determine the recapture rate based on the remaining economic life of a property, you use the formula that relates to the concept of straight-line depreciation. The recapture rate is essentially calculated by taking 100% and dividing it by the remaining economic life of the property.

In this case, with a remaining economic life of 40 years, the calculation for the recapture rate is as follows:

( \text{Recapture Rate} = \frac{100%}{\text{Remaining Economic Life}} = \frac{100%}{40} = 2.5% ).

This means that every year, an estimated 2.5% of the property's value is recaptured. The recapture rate reflects the annual depreciation that an investor can expect to recover over the economic life of the property, which directly influences financial and investment decisions regarding real estate.

This understanding helps assessors and appraisers determine the value of properties while accounting for depreciation over time, giving a clear picture of the property’s value dynamics in the market. Thus, the correct answer reflects the calculated recapture rate based on commonly accepted appraisal methods relating to economic life and depreciation.