This study investigates the life expectancy (LE) and life cycle costs (LCC) of three alternatives of interior partitions in residential units: gypsum board, autoclaved concrete block, and hollow concrete block partitions. The aim is to examine the sustainability and cost-effectiveness of these partitions in various service and occupancy conditions. Three different service conditions were analyzed: Standard (constructed without faults), Inherent Defect Conditions (with initial, non-progressing defects), and Failure Conditions (developing defects over time). To analyze the impact of occupancy conditions, six ‘negative occupancy factors’ were identified that accelerate partition deterioration, including non-ownership, poor maintenance, high residential density, the presence of young children, the presence of domestic animals, and the density of furniture. These factors define four occupancy condition categories: light, moderate, standard, and intensive. The research found that hollow concrete block partitions are the most durable, exceeding 100 years in light or moderate conditions. Gypsum board partitions, while cost-effective, have a lower life expectancy, needing replacement in 11–27 years in intensive conditions. Autoclaved concrete blocks offer moderate durability, with similar costs to hollow blocks in normal conditions. Overall, the study highlights the influence of service and occupancy on the lifespan of interior building components, and provides recommendations for partition type selection that are based on specific conditions. These recommendations are a pivotal outcome, highlighting the study’s significant contribution to the understanding of the long-term performance and sustainability of building materials in residential construction.