Certified Pennsylvania Evaluator Practice Exam

Which of the following qualifies as a proper expense for property management?

1. Real estate taxes

2. Depreciation

3. Salaries for security staff

4. Capital improvements

The correct answer is: Salaries for security staff

The classification of expenses in property management is crucial for the effective financial planning and operational management of a property. In this context, salaries for security staff qualify as a proper expense because they are part of the ongoing operational costs necessary for maintaining the safety and security of the property. Such personnel typically provide essential services that support the day-to-day functioning and management of the property, thus making their salaries a necessary expense for effective property management. Other options, while potentially relevant to property management, don't fit the criteria for a “proper expense” in the same way. Real estate taxes, for instance, are associated with property ownership costs but are often categorized separately from operational expenses like salaries. Depreciation is an accounting method for allocating the cost of tangible assets over time but doesn't involve cash outflows and is viewed more as a non-cash expense. Capital improvements, though important for enhancing property value, represent long-term investments rather than immediate, recurring expenses. Hence, the salaries of security staff stand out as a direct expense associated with property management practices.