What is a depreciation report?

A depreciation report is a capital reserve fund study that helps strata’s plan for the long term. Even though it is mandated by BC strata regulations, it  is a great idea because it gives you:
•    The estimated 30-year funding required for renewals and repairs of the Strata’s capital assets.
•    A 30-year schedule of capital renewals.
•    A complete list of common property assets along with associated capital renewal projections.
•    Three financial models based on the expenditures identified for replacement of the Strata’s major common property assets, as required by BC Strata Property Act.
While many strata don’t currently have a depreciation report it becomes more important for them to get one. Having the information in a depreciation report helps the strata board manage their long term repair and  replacement of their common property assets.

BC Depreciation reports are becoming an increasingly important document in BC very active real estate market. As interest rate rise home affordability becomes more challenging. This challenge directs first time buyers to the condo resale market where many disclosure documents are required during the sale of a strata unit. For high ratio mortgages that requires CMHC insurance it is requested that the most recent depreciation report ( if it exists) must be included as part of the disclosure.

https://www.cmhc-schl.gc.ca/en/co/buho/cobugu/cobugu_007b.cfm

A depreciation report is used to calculate the potential risk in a property transaction. The risk quantified in a BC depreciation report outlines the common property assets, their expected life and their replacement costs. Knowing this information before you buy into a strata is useful for buyers and sellers.

Please contact RSK Strata Advisors for further information.