1) From market value appreciation angle: both land and structure will appreciate in its initial 2-3 decades, the structure value may flatten or decay after that, although very slowly.

2) From IRS tax point of view, they only think of structure depreciation. Over the period of 27.5% years, the value of the house will be depreciated to zero. That’s about 1% a year decay.

However, the depreciation is only on paper and for tax benefit purposes. In real life, one way or another, the total value of a house will go up in value with compounded rate of return over a very long period of time. The portion contributed from land will gradually overtake the whole percentage as time progresses. Therefore, eventually, the location determines how much the house is worth. The value from structure will take more and more a back-seat.

For example, a house located on a key spot by the ocean with a fantastic view, no matter how old that house will become, its value can get higher and higher because the God is not giving us more beach view.