Curable Depreciation§
Curable Depreciation represents a form of depreciation in real estate appraisal where the deterioration or defect in the property can be rectified at a cost that is less than the resultant increase in the property’s value. It means the expenses involved in fixing the issue will be recovered through the improved value of the property.
Examples of Curable Depreciation§
- Painting and Decorative Repairs: Minor cosmetic updates, such as painting walls, repairing trim, or updating fixtures, which can significantly enhance the property’s appearance and market value.
- Roof Repairs: Rectifying minor roofing issues where the repair costs are outweighed by the value it’ll add to the property.
- Landscaping Improvements: Upgrading the property’s landscape by adding new plants, trees, lawns, or decorative features.
FAQs§
Q: What is curable depreciation?§
A: Curable depreciation occurs when the cost to repair a property defect is less than the value the repair will add to the property.
Q: How is curable depreciation different from incurable depreciation?§
A: Curable depreciation can be fixed at a cost that increases the property’s value, while incurable depreciation involves repairs where the cost exceeds the added value.
Q: Can curable depreciation impact property appraisal?§
A: Yes, addressing curable depreciation can significantly enhance a property’s value and affect appraisal results positively.
Q: Is roof replacement considered curable depreciation?§
A: Minor roof repairs may be considered curable depreciation if the repair cost is less than the value added. Complete roof replacement might fall under incurable depreciation.
Q: Are all cosmetic changes considered examples of curable depreciation?§
A: Not all, but many cosmetic changes, such as painting or updating fixtures, can be curable if they enhance the property’s value more than their cost.
Related Terms§
Incurable Depreciation: Depreciation that cannot be feasibly corrected because the cost of correction exceeds the added value it provides to the property.
Functional Obsolescence: A form of depreciation where property loses value due to outdated design features, even if they are still functional.
Economic Obsolescence: Depreciation caused by external economic factors affecting a property’s value that cannot be corrected by extrinsic improvements.
Online Resources§
- Investopedia - Real Estate Appraisal
- Appraisal Institute - Depreciation in Appraisal
- IRS Publication 946 - How to Depreciate Property
Suggested Books for Further Studies§
- “The Appraisal of Real Estate” by Appraisal Institute
- “Real Estate Principles” by Charles J. Jacobus
- “Real Estate Valuation Theory” by Bryan D. MacGregor & Rachael Demand
