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  • In past years some IRS rulings and accounting practices brought into question whether Paint & Sealing should be included in a reserve study due to their categorization as a maintenance expense for tax purposes. Since reserve studies are completed with a different goal in mind it is typically included in a reserve study. 

  • A Homeowners Association which obtains a loan for common area projects should not be including that repayment amount in the reserve study as a common area component expense. Doing so reduces the clarity and credibility of the reserve study and the allocation rate to the account.

  • A common component that is overlooked in many reserve studies is a fire system upgrade. As technology advances, codes are revised and safety concerns change this component is a important and often costly component.

  • The recipe for a successful reserve study is pretty simple and really does not take much of a Property Managers or Board Members time. Follow this simple recipe will result in a great outcome.