Depreciation reports are one of the most commonly misunderstood but vital tools in strata management. They are not just paperwork. They are roadmaps for how buildings age and how costs add up over time. It is an essential tool for how owners should budget for the future.
Jonathan Fenn is an authority on reserve fund studies in BC. He helped shape the University of British Columbia’s curriculum, has reviewed countless reports, and now leads Reserve Sense, a tech company modernizing the way depreciation reports are written. In this article, he dives into the complexities of these reports and provides insight for owners and council members on how to review them.
What a depreciation report really is
At its core, a depreciation report is a long-term financial plan for a strata corporation’s shared assets. It does not cover daily expenses such as landscaping or janitorial work. It focuses on the big-ticket items like roofs, building envelopes, elevators, mechanical systems, and parking garages.
The report answers three critical questions: What is going to fail? When will it fail? And how much will it cost?
In BC, starting in 2026 or 2027 depending on location, every strata will be required to budget at least five years ahead using these reports. Think of it as financial planning, not for people, but for buildings.
Why more data makes better reports
Jonathan notes that the quality of a depreciation report depends heavily on the data provided to the writer.
If a council shares 20 years of financials, past engineering reports, and component studies, the resulting report will be far more accurate. When information is missing, writers have to make assumptions. Those assumptions can turn ballpark estimates into expensive surprises.
Jonathan put it simply: “We can write the report with very little info. It’s just not as good. Doesn’t add as much value as if you give us everything you can have.”
For strata councils, the lesson is clear: do not hold back information. The more detail provided, the better the community’s report will be.
The draft stage: a chance to collaborate
Too often, councils treat the draft depreciation report as a final product. However, drafts are meant to be collaborative.
A first version may include estimates that need refining, sometimes by tens of thousands of dollars. Balconies might be overlooked, roof replacements underestimated, or mechanical systems scheduled too late. This is not failure. This is the point of the draft.
Most reports fall within five to ten percent of final numbers, but major misses can and do happen. By asking questions and challenging assumptions at the draft stage, councils can help ensure accuracy before the finished product is released.
Red flags to watch for
Not every depreciation report is created equal. Knowing what to watch for can make the difference between a useful financial roadmap or a misleading report.
One of the most common issues is missing building assets or incomplete data. If big-ticket components such as elevators, roofs, or building envelopes are not included, the reliability of the entire report comes into question.
Another red flag is when third-party studies, like envelope assessments or elevator reports, are ignored. These documents are meant to strengthen the depreciation report. Leaving them out erodes its credibility. Councils should also pay attention to excessive disclaimers. When a report includes language like “notice to reader,” it often signals that the writer was not given enough information to work with, which puts the accuracy of the findings at risk.
Unrealistic funding models can also be problematic. While projections may look mathematically correct on paper, they sometimes ignore the realities of how councils and owners actually function. A funding plan that is not achievable in practice has little value. Similarly, forecasts that show the reserve balance dipping into the red are a sign that the plan is not sustainable and could lead to serious challenges for the community.
The biggest red flag of all is silence. If a report writer is not receptive to feedback, questions, or collaboration, it is a signal that councils should be cautious. A good depreciation report is not just a product. It is a process, and dialogue is essential for ensuring accuracy and trust.
How councils can get more from reports
A depreciation report is only as useful as the council that engages with it. Jonathan stressed that councils should take an active role by asking tough questions to the writer. Common questions to ask include: How were the component lifespans determined? Which repairs are fully included, and which are partial allowances? What inflation assumptions are built into the numbers?
Transparency goes both ways. Councils need to understand the report deeply enough to explain fee increases to owners. Aggressive funding recommendations may look great in theory, but if they are socially impossible, they will fail in practice.
Jonathan noted: “It’s not just about the math. It’s about what’s achievable for your community.”
The role of technology
One of the most exciting areas of development is how technology is modernizing reserve fund studies.
Reserve Sense is bringing these reports out of static Excel sheets and into dynamic software platforms. Features like SmartSense analyze community behaviour, predict risk, and create actionable dashboards for both councils and owners.
OctoAI is adding its own layer of condo intelligence by helping buyers, owners, and managers make sense of massive amounts of strata documents. Instead of flipping through hundreds of pages, users see the most important risks and financial obligations right away.
Jonathan envisions a future with “one-click funding models and recommendations that are easy to understand.” The real opportunity lies in turning raw data into clarity so councils and owners can make better decisions.
Key takeaways for strata councils and owners
Jonathan puts it simply: “Go get quotes. Right now. The earlier you do it, the cheaper it will be, and the more choice you will have.”
He also shares his key takeaways for strata councils. Depreciation reports are more about collaboration than compliance. More data and council involvement create stronger and more accurate reports. Councils should challenge assumptions, especially for big-ticket components. Technology is closing gaps and helping communities understand funding risks. Starting early gives communities more options, better pricing, and better outcomes.
Final thoughts
Depreciation reports are financial roadmaps that affect every homeowner in a strata. A good report prepares the community for the future. A bad one leaves everyone frustrated and budgets stretched thin.
For strata councils, the message is simple: engage early, provide as much data as possible, and ask the tough questions. For homeowners, understanding the report is part of understanding your financial responsibility within your building.