Before you read
Test yourself first: 5 questions
Question 1 of 5
An appraiser estimates a building's effective age at 10 years against a total economic life of 50 years. Using the straight-line (age-life) method, the accrued depreciation percentage is:
Answer: B. Straight-line depreciation equals effective age divided by total economic life: 10 / 50 = 0.20, or 20%.
Question 2 of 5
Which type of depreciation is ALWAYS considered incurable because the cause lies outside the property and cannot be fixed by the owner?
Answer: C. External obsolescence is caused by factors outside the property, such as neighborhood decline or proximity to a nuisance, so the owner cannot cure it and it is treated as incurable.
Question 3 of 5
Net operating income (NOI) is best calculated as:
Answer: B. NOI equals effective gross income (potential income less vacancy and collection losses) minus operating expenses; it excludes debt service (mortgage payments) and depreciation.
Question 4 of 5
An appraiser values a 20-year-old duplex. The most reliable approach is likely:
Answer: B. Small residential income property leans on comparable sales and the income approach; reconciliation weighs them. Cost is weakest for older buildings (depreciation is hard to estimate), and GRM alone is a rough check, not a primary method.
Question 5 of 5
Accrued depreciation in the cost approach represents:
Answer: A. Accrued depreciation is the cumulative loss in value (physical, functional, external) subtracted from current building cost.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
A $300,000-to-replace building with a 50-year life depreciates $6,000/year; at effective age 10 it has lost $60,000, so its depreciated value is $240,000 — add land separately. Tax-style cost recovery on RESIDENTIAL rentals uses 27.5 years on the IMPROVEMENTS only (39 for nonresidential): a $275,000 building deducts $10,000/year regardless of land. Exam cues: 'effective age' (condition-based) beats chronological age, land NEVER depreciates, and percent-good = 1 − (effective age ÷ useful life).
Depreciation Math (Straight-Line): FAQs
Is Depreciation Math (Straight-Line) on the real estate exam?
Yes. Real Estate Math is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
