How is depreciation typically calculated for properties?

Depreciation for properties is typically calculated based on effective age and total life because this method considers the actual wear and tear of the property over time. Effective age refers to the age of the property as it appears based on its condition, while total life is the estimated lifespan of the property.

By assessing both of these factors, appraisers can determine how much value a property has lost due to age and depreciation. This approach provides a more accurate representation of a property's current value compared to simpler methods, as it takes into account the specific characteristics and condition of the property, rather than just basing it on the original purchase price or potential market trends.

Using effective age and total life allows for a nuanced understanding of depreciation that reflects real-world conditions, which is crucial for accurate property valuation and financial assessments in real estate.