How the Strata Depreciation Report Process Works
A depreciation report is a foundational planning document for strata corporations and building owners. It provides a structured, long-term view of anticipated capital expenditures and supports informed decision-making around maintenance, renewal, and funding.
While the final report presents a clear financial framework, the process behind it is equally important. A well-prepared depreciation report is developed through a series of coordinated steps that combine owner-provided information, a site visit, and professional judgment. The process is structured, but also flexible, recognizing that every property has its own history, records, and constraints.
The objective is not to predict the future with certainty. Instead, the goal is to develop a practical, reliable planning framework that helps strata councils and owners understand risk, timing, and scale as buildings age and capital needs evolve.
Understanding the Purpose of the Process
Before looking at the individual steps, it is helpful to understand what the depreciation report process is designed to achieve.
Buildings are complex systems made up of many components, each with different service lives, maintenance requirements, and replacement costs. Over time, these components deteriorate at different rates and require investment at different points. The depreciation report process brings structure to this complexity by organizing information into a long-term planning model that supports reasoned financial decisions.
Because buildings change over time and information is never complete, the process emphasizes professional judgment, transparency, and reasonable assumptions rather than precision forecasting.
Information and Documentation Review
The first step in preparing a depreciation report is gathering background information about the property.
Establishing Context
At the outset, the strata corporation is asked to provide documentation that helps establish an understanding of the property’s configuration, governance, and history of major maintenance, repair, and renewal activities. Some information is required to meet regulatory requirements under the Strata Property Act and Regulations, while other documents may be requested where they meaningfully improve the clarity of long-term planning.
It is common for records to be incomplete, dispersed, or unavailable. This is an expected part of the process, particularly for older buildings or properties that have experienced changes in management or ownership. The objective is not to reconstruct a perfect historical record, but to gather sufficient context to support a practical planning framework.
Commonly Requested Documents
Examples of documents that are often reviewed include:
- The registered strata plan and current bylaws
- Financial information related to the contingency reserve fund and operating budget
- The most recent insurance appraisal
- Recent AGM and SGM minutes
- Available construction or technical drawings
- Prior consultant reports, where available
- Records of major maintenance, repair, or renewal work
Guidance is typically provided to help focus efforts on the most relevant information, reducing unnecessary administrative burden while still supporting a reliable analysis.
The Site Visit
A site visit is a required component of a depreciation report and forms a critical part of the overall review.
Observing the Property Firsthand
During the site visit, accessible common property areas are reviewed to gain a clearer understanding of how the building or site is configured and constructed. Observations made during this visit help confirm construction types, identify major components, and place the available documentation in context.
The site visit also provides an opportunity to observe general condition, identify evidence of recent work, and note components that may be approaching the end of their typical service life. These observations help validate assumptions and refine the planning model.
Limitations and Professional Judgment
Not all components are visible or accessible during a site visit. Some systems are concealed, and others may be beyond the scope of a visual review. These limitations are normal and are addressed through professional judgment informed by experience with similar buildings and construction practices.
Bringing the Information Together
Once documentation has been reviewed and the site visit completed, the information is evaluated together.
Interpreting Data and Observations
This stage relies heavily on professional experience preparing depreciation reports for a wide range of strata corporations. That experience supports an understanding of how building components are typically designed, constructed, maintained, and how they tend to perform over time in similar environments.
Where information is limited, reasonable assumptions are developed based on observed conditions, typical service lives, and comparable properties. These assumptions are not intended to eliminate uncertainty, but to provide structure and clarity in the face of it.
Identifying Risk and Planning Priorities
This synthesis helps identify potential risks, emerging issues, and areas where closer attention may be warranted. It also allows anticipated capital expenditures to be organized in a way that supports meaningful discussion about priorities, timing, and funding strategies.
Review and Refinement
Collaborative Clarification
This review stage allows owners and council members to better understand the assumptions, projections, and structure of the report. It often prompts useful questions or the sharing of additional context that may not have been available earlier in the process.
Where appropriate, new information can be evaluated and incorporated to improve the final report. This collaborative step helps ensure the document reflects both professional judgment and the owners’ understanding of their property.
The Final Result
The finalized depreciation report provides a clear, organized view of anticipated capital needs over time.
A Living Planning Tool
Rather than a static prediction, the report is intended to support ongoing discussion, budgeting, and long-term planning. As buildings age, work is completed, and new information becomes available, the assumptions and forecasts within the report may evolve.
Periodic updates help keep the information current and aligned with the property’s condition and planning priorities. Maintaining an up-to-date depreciation report allows strata councils and owners to respond proactively as circumstances change and supports more confident, informed decision-making over the long term.
