What does the term "remaining economic life" refer to in property evaluation?

The term "remaining economic life" in property evaluation refers to the period during which a property is expected to generate economic benefits or remain useful, which can be determined by subtracting the effective age from the economic life.

Economic life represents the total duration for which a property can be expected to provide economic benefits, while effective age reflects the age of the property based on its condition and utility, which may differ from its chronological age. Therefore, the remaining economic life is calculated by taking the economic life and subtracting the effective age, indicating how much time is left during which the property is expected to remain profitable or viable in the market.

This concept is critical in property evaluation because it helps assess investment value and make informed decisions regarding property management, maintenance, and improvements. For example, if a property has an economic life of 50 years and an effective age of 20 years, the remaining economic life would be 30 years, indicating a substantial period still available for productive use.