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Age-Life Depreciation
Age-life depreciation is a method of calculating depreciation of a property based on it’s economic life and and physical condition.
It is mostly used by appraisers in the process of estimating appraised value.
Using this method, the effective age of a property is evaluated by assessing it’s condition. The figure would then be divided by itself plus it’s remaining useful economic life.
The end result would be the percentage of value which is depreciated.
For example, a house with an effective age of 5 years and a economic life remaining of 45 years would have 10% depreciation. (5 / 50)
To practice this type of depreciation calculation, one has to be able to accurately determine the variables of effective age and economic life.
Getting these variables wrong can make the depreciation calculated unreliable.
This is one of the many reasons why appraisers are held in high regard in the real estate industry.
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