Depreciation reports, when done correctly, are not confusing or complicated. They provide explicit information to owners, buyers and lenders. It’s all about knowledge – and knowledge is good.
Depreciation reports help to satisfy the need for good and basic financial planning by providing a substantive strategy for capital asset renewals and replacement. Based on the principle of budgeting, a depreciation report helps ensure that property owners have enough money in the bank when it is needed.
This plan determines the following:
- What are your assets?
- What is in your bank account?
- What are your spending needs?
- How will you fund your needs?
Budgets are critical to determining financial health and financial stability. Unfortunately, many people think of budgeting as expensive or depriving themselves. A budget, however, is simply a document that outlines a plan for spending or saving.
Falling under “Part 6 – Finances” of the Strata Property Act, a depreciation report is a financial plan – not for one person – but for many people. It outlines a blueprint for keeping a building in the best shape and providing all stakeholders with visibility for future common expenses so they can do the best job to predict and plan their own financial affairs. The information available in a depreciation report makes it easier for people of all demographics to make sensible decisions about their property.
With a depreciation report owners, lenders and buyers can ensure that:
- Asset values are maintained
- Financial shocks like special levies are minimized
- Funding is equitable amongst all owners over the life of the building
- Money is saved over the long term
With the knowledge a depreciation report provides, each owner, buyer and lender can determine whether their short and long term needs and capacities meet that of the strata.
For property owners, a depreciation report is a critical tool for sound financial planning.
BC Strata Property Act – Part 6 – Strata Property Act
“What to Know About Depreciation Reports” – A CHOA Information Guide
Real Estate Institute of Canada – Certified Reserve Planner
Normac Depreciation Reports – Depreciation Reports