Condition, Effective Age, and Depreciation Percentage

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Condition, Effective Age, and Depreciation Percentage

Depreciation is a lessening in value or worth of a residence caused by wear and tear from use, structural defects, building service deficiencies, and exposure to elements.

Two items are taken into account when determining normal depreciation, Condition and Effective Age.

Condition

The following conditions consider the desirability and usefulness of a residence.

Satisfactory +: The residence is in perfect, like new condition. It is extremely attractive, highly desirable, and very well maintained with no evidence of physical deterioration. Its building services are modern, proper, and adequate.
Satisfactory: Although not new, the residence is quite attractive and desirable. It has been well maintained, however, some minor deterioration is visible. Its building services are proper and adequate. Most insurable residences can be considered satisfactory.
Satisfactory -: The residence is showing signs of normal wear and tear due to both climate and deferred maintenance. It is still attractive, desirable, and its building services are functional.

Effective Age

Effective age is the number or years of apparent age, sometimes determined by deducting the estimated remaining life from normal life. Remodeling or renovation can reduce the effective age. Actual age is the number of years between the date the residence was built and the present date. The effective age, not the actual age, is used in conjunction with the condition to estimate an appropriate amount of depreciation.

Depreciation Percentage

Effective Age in Years	Condition and Typical Life Expectancy in Years
Effective Age in Years	Satisfactory + 60 Years	Satisfactory 55 Years	Satisfactory – 50 Years
1	0 %	1 %	1 %
2	1 %	2 %	2 %
3	2 %	2 %	3 %
4	3 %	3 %	4 %
5	4 %	4 %	5 %
6	4 %	5 %	6 %
7	5 %	6 %	7 %
8	6 %	7 %	8 %
9	7 %	8 %	10 %
10	8 %	9 %	11 %
11	9 %	10 %	12 %
12	10 %	11 %	13 %
13	11 %	12 %	15 %
14	12 %	13 %	16 %
15	12 %	15 %	17 %
16	13 %	16 %	19 %
17	15 %	17 %	20 %
18	16 %	19 %	22 %
19	17 %	20 %	24 %
20	18 %	21 %	25 %
21	19 %	22 %	26 %
22	20 %	23 %	28 %
23	21 %	24 %	29 %
24	23 %	26 %	31 %
25	24 %	27 %	33 %
26	25 %	29 %	35 %
27	26 %	31 %	37 %
28	28 %	33 %	39 %
29	29 %	34 %	41 %
30	31 %	36 %	44 %
31	32 %	38 %	46 %
32	34 %	40 %	47 %
33	35 %	42 %	49 %
34	37 %	44 %	51 %
35	38 %	45 %	53 %
36	40 %	47 %	55 %
37	41 %	49 %	57 %
38	43 %	51 %	59 %
39	45 %	53 %	61 %
40	47 %	55 %	63 %
41	49 %	57 %	64 %
42	51 %	59 %	66 %
43	52 %	60 %	67 %
44	54 %	62 %	69 %
45	55 %	63 %	70 %
46	57 %	65 %	72 %
47	59 %	66 %	73 %
48	61 %	68 %	75 %
49	62 %	69 %	76 %
50	64 %	71 %	77 %
51	65 %	72 %	78 %
52	66 %	73 %	78 %
53	68 %	75 %	79 %
54	69 %	76 %	79 %
55	70 %	77 %	80 %
56	71 %	78 %
57	72 %	78 %
58	72 %	79 %
59	73 %	79 %
60	74 %	80 %
61	75 %
62	76 %
63	76 %
64	77 %
65	78 %
70	80 %
75

Help file last modified: 7/26/2018