What is the term for the expected functional duration of an improvement on property?

The expected functional duration of an improvement on property is referred to as economic life. This term reflects the period during which the property improvement is expected to generate an economic benefit or adequate returns relative to its costs. It takes into account factors like external market conditions, the potential for depreciation, and the overall utility of the improvement.

Economic life is crucial for property valuation, as it helps determine how long an investment in a particular improvement will be viable. Understanding this concept assists property owners and investors in making informed decisions regarding maintenance, replacement, or potential upgrades to a property.

While the terms physical life, useful life, and asset life might seem related, they describe different aspects or contexts of an asset's longevity. For example, physical life pertains to the actual time that a physical structure will last before it deteriorates, while useful life is more focused on the period an asset can be employed effectively in its intended use, which may not always align with economic considerations. Asset life is a broader term that may encompass various definitions depending on the context.