valuation

effective age

Effective age is the age a building appears to be based on its condition, maintenance, and updates, as estimated by an appraiser. It may be greater or less than the building's actual, chronological age. A well-maintained or renovated home has a lower effective age, while a neglected one has a higher effective age. Appraisers use effective age with total economic life to estimate depreciation in the cost approach.

Exam tip
Depreciation by the age-life method = effective age / total economic life. Use effective age, not actual age, in the formula.
Example
A 40-year-old house that was fully renovated has an effective age of 15 years. With a 60-year economic life, depreciation is 15/60 = 25%.

Related terms & state variants

Sources

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Last verified: 2026-10-23