What is the effective age used to estimate depreciation in the Overall (Age/Life) method?

The effective age used to estimate depreciation in the Overall (Age/Life) method is defined as the remaining economic life of the property. This concept reflects how long a property is expected to generate positive cash flow, contributing to the overall valuation of the asset.

The Overall (Age/Life) method assesses depreciation based on the relationship between the effective age of the property and its total economic lifecycle. By considering the remaining economic life, appraisers can more accurately quantify depreciation, factoring in the property’s current condition, maintenance levels, and market demand, rather than simply the chronological age since construction.

Utilizing the remaining economic life provides a clearer picture of the property's potential for continued income generation and helps inform decisions concerning required repairs or renovations. This detailed understanding of effective age supports appraisers in providing a valid and well-founded estimation of a property's depreciation.