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Reserve Studies (HOAS)

Other Tax Incentives for Property Owners

The objective of a reserve study is to recommend the minimum annual reserve Contribution Rate made by a condominium association to its Reserve Account. Legislature encourages every condominium association to establish a Reserve Account to fund major maintenance, repair, and replacement of common elements, including limited common elements that will require major maintenance, repair, or replacement within thirty years.

The Reserve Study is intended to provide adequate funds for the replacement or major repair of any component of the property as it becomes necessary. It is a budget planning tool which identifies the current status of the Reserve Account and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures.

For a reserve study, each reserve component included is evaluated to determine the current condition, the remaining useful life, and the estimated replacement cost. This information is then synthesized into a spread sheet format which determines the annual contribution rate needed to avoid special assessments in the future. All costs and annual reserve balances are shown both in constant dollars and adjusted for annual inflation and interest earned. Ideally, an even level of contributions is established that maintains a positive balance in the Reserve Account over the life of the study.

The most accurate reserve studies are conducted by an engineer who knows building construction. When you work with ETS, you can be confident a degreed engineer will conduct your on-site inspection and develop your reserve study.

Additionally, your study will be reviewed by other senior engineers as part of our quality review process. We insist on this extra step to ensure accuracy for you – something many other providers don’t or can’t do.

DISCLAIMER: This article is an opinion piece regarding things financial and how they shape our everyday lives. This is opinion only and is not intended or should be taken as investment advice. We do not guarantee the accuracy of any statements as should not be relied upon otherwise.

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