Wondering What a Depreciation Report Is?
Let's Break It Down!
A Depreciation Report is a comprehensive document that outlines the current condition and anticipated future costs of maintaining and repairing a building’s major components. Required by regulation for strata properties in British Columbia, this report provides a 30-year financial projection to help property owners plan for long-term expenses and maintain the value of their investment.
By assessing elements like the roof, plumbing, and exterior, a Depreciation Report helps strata councils and property managers in Metro Vancouver and across BC make informed decisions, avoid unexpected costs, and ensure a healthy reserve fund. Whether you’re looking to comply with the BC Strata Property Act or simply want to stay ahead of potential repairs, a Depreciation Report is an essential tool for proactive property management.
COMPREHENSIVE BUILDING ASSESSMENT
30-YEAR FINANCIAL PROJECTION
RESERVE FUND ANALYSIS
COMPLIANCE WITH BC REGULATIONS
PRIORITIZED MAINTENANCE PLAN
EASY-TO-UNDERSTAND
DETAILED REPORT
At ENGIPRO, we take pride in our detailed and systematic approach to preparing Depreciation Reports that help strata corporations plan for long-term property maintenance and financial health. Below is a flowchart that visually outlines our step-by-step process, ensuring a comprehensive, accurate, and reliable report. Each phase is carefully crafted to provide you with actionable insights for effective building management.
Our Depreciation Report Methodology
Why is a Depreciation Report IMPORTANT?
Avoiding Unexpected Expenses
Without a Depreciation Report, strata corporations risk sudden and costly repairs that can lead to unplanned special levies. The report provides an assessment of the building’s condition, identifying upcoming maintenance needs. This allows for better budgeting and ensures the reserve fund is sufficient to cover future expenses, preventing financial surprises.
Complying With Updated Regulations
Effective July 1, 2024, the Province of BC requires strata corporations with five or more lots to obtain a Depreciation Report on a five-year cycle, as per OIC 204-2024. The option for an annual ¾ vote to defer the report is no longer allowed. Non-compliance can lead to legal consequences and affect the strata’s governance.
Protecting Your Investment
A Depreciation Report helps maintain the long-term value of your property by identifying and addressing potential issues early. This proactive approach prevents costly emergency repairs and keeps the building in good condition, making it more attractive to buyers and investors, and safeguarding your investment.
Enhancing Financial Planning
The report provides a clear financial roadmap for future repairs and replacements, enabling strata councils to plan reserve fund contributions effectively. This helps avoid large, unexpected special assessments and ensures financial stability and predictability for the community.
WHY ENGIPRO
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Inside a Depreciation Report:
What Do We Inspect?
A Depreciation Report provides an assessment of your building’s key components to help plan for long-term maintenance and costs. Our expert team inspects everything from the exterior walls and roof to essential systems like plumbing, electrical, and HVAC. By examining your building’s structure, windows, doors, and common areas, we ensure that all elements are accounted for.
Discover the key areas we inspect to keep your property in top shape!
FAQs
>> How long does a Depreciation Report remain valid?
A Depreciation Report is typically valid for 5 years in British Columbia, as per regulatory requirements. After that, strata corporations are required to update the report to ensure it reflects the current building condition and financial projections.
>> What is the purpose of a Depreciation Report?
The purpose of a Depreciation Report is to assess the condition of a building’s major components and provide a 30-year financial projection. This helps strata corporations plan for future repairs and replacements, ensuring that sufficient funds are available in the reserve fund.
>> Is a Depreciation Report mandatory for all strata properties?
In BC, strata corporations with five or more units must obtain a Depreciation Report every five years, according to updated provincial regulations. Strata corporations with fewer than five units are exempt, but it is still recommended for financial planning purposes.
>> How is the cost of a Depreciation Report determined?
The cost of a Depreciation Report is influenced by the size, complexity, and age of the building. Larger buildings with more intricate systems or older properties that may require detailed inspections typically result in higher costs. Try our price calculator!
>> What happens if we don’t update our Depreciation Report?
Failing to update your Depreciation Report can result in financial risks, as you won’t have an up-to-date assessment of your building's condition and repair needs. This could lead to unexpected costs or insufficient reserve funds, which may impact the property’s value or lead to higher fees for owners.
>> Who prepares a Depreciation Report?
In BC, Depreciation Reports must be prepared by qualified professionals such as engineers, architects, or certified reserve planners (CRP). These professionals are trained to assess building components and provide accurate financial forecasts.
>> What should we do with the Depreciation Report once it’s completed?
Once completed, the Depreciation Report should be reviewed by the strata council and shared with property owners. The financial projections should be used to adjust reserve fund contributions and ensure adequate funds for future maintenance.
>> Can I claim depreciation on tax returns?
In most cases, depreciation for strata properties is related to reserve funds and maintenance planning, rather than tax claims. However, commercial property owners may be able to claim depreciation expenses on their tax returns. It's best to consult with a tax professional for specific advice.