A Small Rental Condo: Why the Minimum Fee Matters

The fictional situation

The fictional unit owner has a 900-square-foot rental. Only the agreed unit-related basis is considered; the example assigns no assumed basis to association-owned amenities.

Read the numbers correctly

The example assumes 900 square feet, a $2,000 Stratum study fee, and $500 of separately engaged implementation work. It assumes $10,000 of additional depreciation compared with the no-study baseline, a 24% marginal rate, and 100% usability in the modeled period. None of these deduction or implementation inputs is a quote or a completed study result.

Calculate the early-period comparison

Assumed tax reduction = $10,000 × 100% × 24% = $2,400. Combined assumed cost = $2,000 + $500 = $2,500. The arithmetic difference is $-100. This is an undiscounted early-period comparison; it is not a lifetime return, permanent savings estimate or recommendation.

Change the assumption that matters

Under these assumptions, the modeled tax reduction is $100 below combined costs. A positive reclassification amount can coexist with unattractive short-term economics. Later deductions, future use and sale treatment still require a full model.

What the example leaves for review

The preparer must establish the depreciation difference, when deductions can be used, the relevant marginal rates, state treatment, later-year depreciation and sale consequences. This example does not calculate bonus eligibility or assign asset lives. Use the fee-benefit tool to substitute adviser-supported inputs, then retain the complete multi-year analysis before commissioning the work.

Continue with your property decision