What is a flat depreciation rate?

A flat depreciation rate refers to a specific rate that is applied to determine the depreciation of improvements made to a property, such as buildings and structures. This method simplifies the calculation of depreciation by applying the same percentage rate consistently over the useful life of the improvements, regardless of variations in their condition or market demand. It allows for a straightforward approach to estimating the reduction in value due to wear and tear, obsolescence, or other contributing factors.

The concept is particularly relevant in property appraisal, accounting, and real estate transactions, as it helps both buyers and sellers understand the value of improvements over time. Since it applies uniformly, using a flat depreciation rate can effectively streamline financial assessments and decisions related to property valued over a specific period.