Texas Property Tax Consultant Practice Exam

What is an example of curable physical depreciation?

1. Outdated design features

2. Severe structural damage

3. Poor location

4. Functional obsolescence due to changes in technology

The correct answer is: Outdated design features

Curable physical depreciation refers to a decline in property value due to factors that can be remedied at a reasonable cost. Outdated design features fall into this category because they often involve cosmetic updates or renovations that can enhance the property's appeal and market value. For instance, updating fixtures, flooring, or room layouts can modernize a property without incurring prohibitive costs. In contrast, the other choices represent forms of depreciation that are either more severe or more complex to address. Severe structural damage generally requires extensive repairs that may be costly and disruptive, making it less likely to be classified as curable. Poor location is a fundamental aspect of the property's characteristics that typically cannot be changed or improved economically. Functional obsolescence due to technological changes involves a permanent loss of value that cannot be easily fixed, as it might require complete overhauls or significantly costly updates to reintroduce functionality that has been lost due to advancement in the industry. Thus, outdated design features represent a scenario where appropriate investments can effectively restore some of the property's value, distinguishing it as an example of curable physical depreciation.