Property Valuation
In South Dakota, 'economic life' of an improvement versus 'physical life' means:
AThey are the same concept
BEconomic life is the period during which the improvement contributes value to the property; physical life is how long it remains standing structurally✓ Correct
CPhysical life is shorter than economic life for modern buildings
DEconomic life refers to the tax depreciation schedule only
Explanation
Physical life is how long a building will stand before it physically deteriorates. Economic life is the period during which the improvement contributes positively to the property's value. Economic life ends when the improvement no longer adds value (even if it is still standing), such as when the land value alone exceeds the improved property value.
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