Depreciation Report

What is a depreciation report?

A depreciation report is a study of all the depreciating components a strata corporation will need to repair and replace over the next 30 years. It records the present condition of each component, estimates when it will need repair or replacement, and what that will cost — then compiles those timelines and costs into a financial projection that helps the corporation set appropriate contributions. A report generally includes an inventory of common property, a component analysis (condition, actual and effective age, remaining life, and replacement costs), a financial analysis of the reserves required, and funding recommendations.

Who can prepare a depreciation report?

The Strata Property Act and its regulations do not designate specific professions. Stratas can obtain reports from a variety of qualified professionals. The person preparing the report must have the knowledge and expertise to:

• Understand the scope and complexity of the strata's common property and common assets
• Understand the individual components
• Understand the strata's bylaws and any agreements respecting common property and strata lots
• Prepare a report that complies with the regulations — a physical component inventory and evaluation, plus financial forecasting

The report must also include the name of the person it was obtained from, along with a description of their qualifications, any errors-and-omissions insurance they carry, and their relationship to the strata corporation.

Why a depreciation report matters

A depreciation report helps your strata plan and prepare for the future, ensuring enough funding is set aside to maintain, repair, or replace common components. Without an accurate, up-to-date report you can't effectively plan, leaving owners exposed to costly out-of-pocket repairs through a cash call or special assessment. The benefits:

Asset protection

Adequate capital to maintain common property and reduce or eliminate special assessments.

Lower operating costs

Servicing or replacing components at the recommended time prevents expensive emergency repairs.

Peace of mind

Sufficient funding reduces the risk of a special assessment and makes the property more attractive when selling.

An up-to-date report is also required in many jurisdictions to complete a sale — without one, conditions of sale can be delayed and buyers may walk away.

Getting the most out of your report

The key is making sure the report aligns with the property's future goals. Choose a provider that encourages open dialogue. The council should be open to the provider's recommendations — an unbiased account of the property's condition — while sharing the historical knowledge owners and managers hold about the building. Owners may also want changes included that aren't strictly required by condition; a good provider incorporates those where they don't compromise the property's financial future. Without strong collaboration, it's difficult to keep a report relevant and accurate until the next one is due.

How Reserve Plus saves you money

Stratas use Reserve Plus for comprehensive, accurate depreciation reports — delivered as a first draft in 30 days or less. Every client also gets myRPlanner (powered by StelorPM), included for the full term, so the report stays a living plan. With myRPlanner you can create and approve your own reserve fund plan, generate annual reports comparing actual vs. expected contributions and expenditures, understand your special-assessment risk, request quotations for upcoming work, and see how current financials relate to the reserve fund.