Texas Property Tax Consultant Practice Exam

Which two types of physical depreciation are identified in property valuation?

1. Functional and economic

2. Curable and incurable

3. Structural and non-structural

4. Depreciable and non-depreciable

The correct answer is: Curable and incurable

In property valuation, physical depreciation is a critical factor to consider as it pertains to the decline in property value due to wear and tear, disrepair, or obsolescence. The identification of curable and incurable physical depreciation plays a crucial role in determining how much of the depreciation can be effectively remedied and how much is permanent. Curable physical depreciation refers to those elements of the property whose negative impact on value can be corrected or improved at a cost that is less than the value it adds to the property. For example, if a property has a leaking roof, repairing it would fall into the curable category, as it is a specific issue that, when fixed, will restore value to the property. In contrast, incurable physical depreciation describes conditions that cannot be economically fixed. This may include structural damage that would cost more to repair than the value it would bring back to the property, such as a property's foundational issues or significant environmental damage. These distinctions help appraisers and property consultants make informed decisions regarding property valuation and investment potential. The other options do not accurately represent the concepts specifically related to physical depreciation within property valuation, focusing instead on broader categories or aspects of property analysis that do not directly address physical depreciation in the context of valuation.