Author: BC Government

Strata depreciation report requirements

Publication date: April 22, 2024

Under B.C.'s Strata Property Act and regulations, all strata corporations with five or more strata lots must obtain depreciation reports. Strata corporations may no longer defer getting a depreciation report by holding an annual 3/4 vote. Strata corporations will have time to meet this requirement.

Learn more on this page:
Purpose of depreciation reports
Overview: updated regulations
Content requirements
Qualifications for report providers
Access to and retention of reports

Purpose of depreciation reports

Strata corporations are legally required to repair and maintain common property. A depreciation report tells a strata corporation what common property and assets it has and the projected maintenance, repair and replacement costs over a 30-year time span.

Common property is not just buildings. Common property and assets can also include landscaping, roads, recreational amenities and many other items. All strata corporations including bare land strata corporations (sometimes referred to as “strata subdivisions”) with five or more strata lots will also have to obtain depreciation reports on a five-year cycle. Bare land strata corporations are usually responsible for the long-term repair and maintenance of subdivision infrastructure including roads, water, electricity, and sewage.

The depreciation report helps strata lot owners protect their homes and investments and avoid being surprised by unexpected special levies. The report also provides valuable information to prospective buyers, mortgage and insurance providers.

Overview: updated depreciation report regulations

Effective July 1, 2024, the Province has strengthened requirements for strata depreciation reports as per OIC 204-2024 (deposited April 22, 2024).

• All strata corporations with five or more lots must obtain a depreciation report on a five-year cycle; strata corporations with four or fewer lots continue to be exempted

• Strata corporations may no longer hold an annual ¾ vote to defer getting a depreciation report

• Strata corporations without depreciation reports, or depreciation reports received prior to December 31, 2020, will have time to obtain depreciation reports:

  • until July 1, 2026, if located in Metro Vancouver, the Fraser Valley, or the Capital Regional District (excluding the Gulf Islands and other islands within the CRD)

  • until July 1, 2027, if located in other areas of British Columbia

• Effective July 1, 2025, strata corporations must obtain depreciation reports from six designated professions: engineers, architects, applied science technologists, accredited appraisers, certified reserve planners, and quantity surveyors

• New strata corporations established on or after July 1, 2024 but before July 1, 2027, must get a depreciation report within two years of the strata corporation’s first annual general meeting and every five years thereafter

• As of July 1, 2027, owner developers will provide some funding towards the first depreciation report for new strata corporations with five or more lots: a minimum of $5,000 plus $200 per strata lot to a maximum of $30,000. Accordingly, strata corporations established on or after July 1, 2027, must obtain a depreciation report within 18 months of the strata corporation’s first annual general meeting

The regulations have added to the content required in depreciation reports: an executive summary, and (if applicable to the strata corporation) air conditioning and ventilation. 

Content requirements

As per Strata Property Regulation 6.2, a depreciation report must have certain content.

Physical component inventory and evaluation

A depreciation report must include a physical component inventory and evaluation of components which must:

• be based on an on-site visual inspection of the site and, where practicable, of the components conducted by the person preparing the depreciation report

• include a description and estimated service life over 30 years of those items that comprise the common property, the common assets and those parts of a strata lot or limited common property, or both, that the strata corporation is responsible to maintain or repair under the Strata Property Act, the strata corporation's bylaws or an agreement with an owner

Items to be reviewed include (but are not limited to):

• the building structure

• the building exterior including roofs, roof decks, doors, windows and skylights

• the building systems, including the electrical, heating, ventilation, air conditioning, plumbing, fire protection and security systems

• common amenities and facilities (for example: pool, exercise room, guest house etc)

• parking facilities and roadways

• utilities, including water and sewage

• landscaping, including paths, sidewalks, fencing and irrigation

• interior finishes, including floor covering and furnishings

• green building components

• balconies and patios

The list above is not a complete list; and not every strata corporation will have all of the components listed above. The list will vary by strata corporation. For example, some strata corporations have building structures they are responsible for repairing and maintaining, others do not. Some strata corporations will have water utilities they are responsible for repairing and maintaining, others do not.

The depreciation report must also identify those parts of the common property and limited common property, if any, that individual strata lot owners are responsible to repair and maintain. For example, patios and balconies that are designated limited common property in a high-rise "condo tower".

Financial forecasting section

Depreciation reports must also include a financial forecasting section to help the strata corporation, and owners, to plan for the repair and maintenance of common property and assets.

The financial forecasting section must include:

• The anticipated maintenance, repair and replacement cost for contingency reserve fund common expenses (expenses that usually occur less often than once a year or do not usually occur) projected over 30 years and the factors and assumptions used, including interest and inflation rates.

• At least 3 cash-flow funding models for the contingency reserve fund over 30 years. Cash flow models could include: the contingency reserve fund, special levies, increased strata fees, borrowing or some combination of these. The models must include projected inflation rates and the interest generated from money invested in the contingency reserve fund (CRF). Note: the models are provided in the report for consideration by the strata corporation, they do not have to be adopted.

• The current balance of the contingency reserve fund (CRF), minus any expenditures that have been approved but not yet taken from the fund, and how the CRF is currently funded.

Depreciation reports must also include:

• A summary of the repair and maintenance work for common expenses that occur less often than once year (i.e. contingency reserve fund expenses)

• The date of the report

• Any other appropriate information or analysis that the strata corporation or the person providing the depreciation report considers appropriate

• An executive summary

Qualifications for report providers

Effective July 1, 2025, the Strata Property Act and regulations specify six professions which can prepare depreciation reports. These six professions are: engineers, architects, applied science technologists, certified appraisers, certified reserve planners, and quantity surveyors.

When obtaining a depreciation report, strata corporations should choose a provider from the designated professions that has experience with their type of strata corporation. For example, the knowledge and expertise required to prepare a depreciation report for a six-plex will be considerably different than the knowledge required to prepare a depreciation report for a high-rise residential “condo” tower with its own power generating plant, sections, and underground parkade. 

The regulations continue to require that the person (note: the word “person” used in the regulations is a legal term and can mean either an individual or a company) preparing the depreciation report have the knowledge and expertise to:

• understand the scope and complexity of the strata corporation's common property and common assets

• understand the individual components

• understand the strata corporation’s bylaws and any agreements entered into with owners respecting common property and strata lots

• prepare a depreciation report that complies with the regulations including  a physical component inventory and evaluation and financial forecasting

The depreciation report must include the name of the person from whom the depreciation report was obtained and a description of:

• that person's qualifications

• the error and omission insurance, if any, carried by that person

• the relationship between that person and the strata corporation

Access to and retention of reports

The most recent depreciation report, if any, must be attached to the "Form B: the Information Certificate" and provided to buyers.

Under Section 35 of the Strata Property Act, the strata corporation must retain:

• any depreciation reports obtained by the strata corporation under section 94 of the Strata Property Act

• any reports obtained by the strata corporation respecting repair or maintenance of major items in the strata corporation, including, without limitation, engineers’ reports, risk management reports, sanitation reports and reports respecting any items for which information is, under section 94 of the Strata Property Act, required to be contained in a depreciation report

• the records and documents referred to in section 20 or 23 obtained by the strata corporation. These are documents provided to the strata corporation by the owner developer.

References:
Strata Property Act sections: 1, 35, 59, 91-96, 98-101, 103, 105, 108, 109, 111, 158, 194, 195
Strata Property Regulation: 6.1-6.6, 6.11, 11.1-11.3

Find it fast: a handy site map listing all the strata housing pages.

Disclaimer: the information on this website about strata housing is provided for the user’s convenience as a basic starting point; it is not a substitute for getting legal advice. Learn more about the site’s purpose and limits. The content on this website is periodically reviewed and updated by the Province of British Columbia as per the date noted at the top of each webpage.

They would be the first residential towers built on the actual Metropolis at Metrotown site — other highrises in the neighbourhood were constructed by other developers

Author of the article:

John Mackie

Published Apr 18, 2024  •  Last updated 5 hours ago  •  3 minute read

Metrotown may soon get bigger. A lot bigger.

A proposal unveiled by the Burnaby shopping centre’s owner Ivanhoe Cambridge shows 15 new highrise towers to be built on its 35-acre (14-hectare) site by 2054.

“In the first phase, the 15 towers, we’re looking at 12,000 units, of which 2,000 of those would be (aimed at) the City of Burnaby’s inclusionary rental (program), so affordable units,” said Maxime Allaire, the director of Asset Managment Retail at Ivanhoe Cambridge. “We’re estimating 20,000 people living in those units.”

This would be the first residential towers built on the actual Metropolis at Metrotown site — the other highrises in the surrounding neighbourhood were constructed by other developers.

The master plan for the site is still being worked out with the City of Burnaby, so Ivanhoe Cambridge has put its plans up on a new public engagement website to get feedback.

“This is the master plan, it’s establishing the vision for the site, building on the city’s downtown plan,” said Allaire. “We’re not at the stage of building out the buildings, that would require another stage of construction permits.”

There are no numbers in the online presentation detailing the height of the towers, but some appear to be 60 storeys or higher.

But that’s just a concept, nothing has been approved or even designed as yet.

“You can see by the renderings what we’re trying to aim for, but that’s still in discussion with the city,” said Allaire.

The Metropolis at Metrotown mall is situated between Kingsway, Central Boulevard, Station Street and Bonsor Avenue. The mall is in the middle of the site, and the new towers are to be built in “seven distinct parcels” in the northwest, southwest, southeast and eastern parts of the property over the next 30 years.

The last phase of the redevelopment will be the mall itself after 2054, “in parallel with the expiry of the leases of the significant anchor tenants.”

Until then, Metrotown will continue to operate as usual. It draws over 20 million people per year to its 341 stores and restaurants.

“It’s a mall that’s anchored in the community,” said Julie Bourgon, the head of retail at Ivanhoe Cambridge. “People come there to shop, to spend time, to gather with people on a rainy day. Our plan is to continue to provide such features for the community.”

Burnaby released a plan in 2017 that calls for Metrotown to become the city’s official downtown. The 2017 Metrotown plan said Burnaby is looking to add 125,000 people by 2041 as part of the Metro Vancouver Regional Growth Strategy, although it doesn’t say how many would be in the Metrotown area.

In its online presentation, Ivanhoe Cambridge said its development looks to provide “a focused core area of vibrant economic activity, amenities and public spaces.”

It has five “core” values: vibrant retail, access to nature, environmental and social sustainability, embracing the arts, and embracing connections.

The presentation said the development will feature an “improved pedestrian network” with a “walkable downtown.”

There will be open space through “a series of interconnected plazas and green spaces, linked to four gateway entrances on Kingsway and Central Boulevard.”

The plan also includes a neighbourhood park along Sussex Avenue.

jmackie@postmedia.com

Will you be hit by B.C.'s new 'flipping tax'? You might be surprised. Plus other questions were answered.

Author of the article:

Dan Fumano

Published Apr 05, 2024  •  Last updated Apr 07, 2024  •  5-minute read

Will you be hit by B.C.'s new 'flipping tax'? You might be surprised. Plus other questions answered. PHOTO BY JASON PAYNE /PNG

The B.C. government has introduced legislation enacting what is officially known as the “residential property (short-term holding) profit tax act,” but more commonly known as the flipping tax.

The B.C. NDP has said the tax will target profiteers whose speculative real estate activity makes real estate less affordable and attainable for regular British Columbians looking for homes. Experts disagree on what impact the tax will have, and many owners — and potential sellers — of B.C. homes have questions.

What is the flipping tax?

The tax, first announced in February with the release of the 2024 budget, will apply to profits from the sale of B.C. residential property held for less than two years. The tax can apply to any properties zoned for residential use, as well as on income derived from reselling purchase contracts, such as those for presale condos.

This isn’t a penalty that applies to all homes that are flipped quickly, but a tax specifically on profit generated by such sales. If a home is sold in less than two years at a loss or for no profit, the tax will not apply.

What is the intent of the tax?

Provincial government leaders have described the tax as a measure to discourage the kind of speculative activity in real estate that contributes to inflated housing costs.

Finance Minister Katrine Conroy has said the tax is “taking action against investors who use the housing market as a stock market,” while Housing Minister Ravi Kahlon said: “Homes are meant to be lived in by people in our communities, not used for speculation.”

In 2022, the idea of a flipping tax was proposed by now-Premier David Eby, who was formerly housing minister, during his campaign for the B.C. NDP leadership.

All revenue generated from the tax will go into housing programs, and the 2024 provincial budget estimated it would raise $11 million in its first year, increasing to $43 million the following year.

How is the tax calculated?

It will vary over time, starting at a rate of 20 percent of the profit generated by the sale of property any time within its first year of purchase, declining over the next 365 days so that the rate is zero at the end of the second year.

When does it apply?

After the legislation is passed, the tax will take effect Jan. 1, 2025. That means that someone who purchased a property as early as 2023 — long before the flipping tax was first announced — could be hit with the tax if they sell in 2025, depending on the precise timing.

What are the exemptions?

Home-sellers will be exempt from the flipping tax if the sale of the property “can reasonably be considered” to be related to several life circumstances listed in the legislation, including:

• Divorce
• Death
• Serious illness or disability
• Moving for work or post-secondary education
• Involuntary job loss
• A threat to someone’s personal safety
• Bankruptcy
• If a home becomes uninhabitable due to natural disasters such as floods, landslides or earthquakes

Builders will be exempt from the flipping tax if they’re adding to the housing supply. For example, if a new housing unit is built on the property before its sale, or if a builder adds a secondary rental unit, the flipping tax wouldn’t apply.

The tax doesn’t apply to certain kinds of properties, including those acquired through inheritance or won through a lottery, or those on First Nations reserves or treaty lands.

The tax applies to individuals or companies selling property, but not to charities, governments and government-owned corporations, Indigenous Nations and non-profit groups.

How widespread is this kind of home-flipping activity?

The province estimates that around 4,000 properties per year will be subject to the tax.

The B.C. Real Estate Association estimates that short-term flipping represents less than two per cent of sales activity in the Vancouver and Victoria markets.

While the market is currently slower, B.C.’s real estate market has previously seen surges in flipping activity over the years. The province has estimated that seven per cent of residential house sales between 2020 and 2022 were resold within two years. B.C. also saw flipping increase shortly before the 2008 economic crisis and during the hot market of 2016, data analyst Jens von Bergman told Investigative Journalism Foundation reporter Bethany Lindsay last month.

What’s been the public reaction so far?

Some have argued that the flipping tax could have unintended consequences. The B.C. Real Estate Association has said its preliminary analysis estimates the tax will decrease home sales by between one and two percent over three years.

“Because the government has now implemented a disincentive to sell within a two-year period after purchasing, there will be some potential sellers that are prompted to delay listing, resulting in a lower level of listings’ inventory than without the tax,” BCREA policy analyst Brenna Friesen wrote in a post on the association’s website in February. “As a result, home prices may increase with the flipping tax compared to a no-tax baseline.”

B.C. United finance critic Peter Milobar predicted the tax was “not going to do much to address affordability,” CTV News reported.

Others have welcomed the tax, including Condominium Homeowners Association of B.C. executive director Tony Gioventu, who was quoted in the province’s news release saying it would “slow the speculator frenzy that happens when a flippable property is listed for sale frequently, resulting in unauthorized, unpermitted rushed alterations, leaving communities with a legacy of building failures and conflict.”

dfumano@postmedia.com

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