Incurable Depreciation — Short-Lived Items

Short-lived items are building components that wear out and need to be replaced more frequently than the structure as a whole — items such as the roof covering, HVAC system, carpeting, and water heater.

When the cost to repair or replace one of these items would not be economically justified by the resulting increase in value (or when the item is not yet at the end of its useful life and is therefore not currently being replaced), the depreciation associated with that item is treated as incurable physical depreciation — short-lived.

For each short-lived item, the appraiser calculates depreciation as: (actual age ÷ useful life) × cost of the item. The depreciation amounts for all short-lived items are then summed to arrive at the total incurable physical depreciation attributable to short-lived items.