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What is a Depreciation Report?

Posted by Jonny on July 25, 2024
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Depreciation Reports are a tool used by strata corporations to assess all the common assets in a building. Some examples are the roof, siding, balconies, elevators, parkade membrane, plumbing. Strata’s will hirer an independent engineering company to conduct a review on the common assets, which they will then provide analysis on the current condition, remaining useful life, as well as the anticipated cost in future years for maintenance, repair, and replacement to help the strata, plan and budget for the future. The depreciation report will also consider the strata’s current contingency reserve fund and budgeted annual contributions to forecast their financial health and determine whether they should be adjusting their budgeting.

Depreciation reports are an extremely helpful tool for Buyers when looking to purchase a property, as they help understand the history of the building and what might be potentially coming down the pipe. They are also very beneficial to strata’s  and the owners for budget and planning, as well as providing to buyers to give a level of comfort with the building. They are also useful to mortgage and insurance providers.

A lack of a depreciation report or even an outdated report, can make it difficult for Buyer’s to understand how the building is currently performing and what expected expenses might be coming up in their planned time of ownership.

The BC Government came out on April 22, 2024 that they are changing the requirements for Strata’s with respect to Depreciation Report. Effective July 1, 2024 Strata Corporations of five or more lots must obtain a depreciation report on a 5-year cycle and can no longer defer with a 3/4 annual vote. Any reports received prior to December 31, 2020 will need to be updated by July 1, 2024 for strata corporations in Metro Vancouver, Fraser Vancouver and Capital Regional District (excluding the Gulf and other islands in the CRD).

If you are looking for help with your condo or townhome, or have questions about depreciation reports – don’t hesitate to reach out!

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