Remaining Economic Life Calculator

Enter effective age and total economic life to see results.

What remaining economic life means

Remaining economic life (REL) is the appraiser's estimate of how many more years an improvement will contribute to the property's value. When REL reaches zero, the improvement has no remaining contributory value -- though the land retains its value.

The age-life method

The simplest and most common depreciation method divides effective age by total economic life to get a depreciation percentage. This percentage is then applied to the replacement cost new (RCN) to calculate accrued physical depreciation.

Economic life by quality class

Total economic life varies by construction quality. Average quality (Q4) homes typically have a 60-year economic life. Good quality (Q3) construction may be 70 years. High quality (Q2) can reach 80 years. Your market and cost service should guide the selection.

How this feeds into the cost approach

The cost approach value = Site Value + (RCN - Accrued Depreciation). Physical depreciation (from age-life), functional obsolescence, and external obsolescence are all subtracted from RCN before adding site value.

What is remaining economic life?

Remaining economic life is the estimated number of years the improvements will continue to contribute to the total property value. It equals total economic life minus effective age. An appraiser with a 60-year economic life estimate and a 20-year effective age would assign 40 years of remaining economic life.

What is a typical economic life for a house?

Most appraisers use 60 years for average-quality residential construction. Better quality homes (custom, high-quality materials) may have lives of 70-80 years. Lower quality or modular construction may be 40-50 years. Marshall and Swift and similar cost services provide quality-based guidance.

How does remaining economic life affect value?

A longer remaining economic life means less physical depreciation is applied to replacement cost new, which results in a higher indicated value in the cost approach. Properties with very short remaining lives may have cost approach indications well below the sales comparison approach, which appraisers reconcile in their analysis.