What are body corporate fees:
Body corporate fees (also known as strata fees) are a common expense for owners of strata-titled properties, such as apartments and townhouses, in Australia. These fees are used to fund the maintenance and upkeep of common areas and shared facilities such as pools, driveways, facilities, foyers and stairwells within a either an apartment, townhouse or duplex, as well as to manage the buildings administration and finances.
In this article, we will explore what body corporate fees are used for, whether they are tax deductible in Australia, and offer some tips for managing these costs.
Why are body corporate fess charged?
The fees are charged to cover the costs of maintaining and managing common property in a strata scheme or community title development. These fees are used to pay for expenses such as:
- Landscaping
- Lighting
- Building insurance
- Lifts
- Pools
- Outdoor living areas
- Administrative and management fees
- Recreational space
How are body corporate fees calculated?
Generally speaking, the fees are calculated based on the costs associated with maintaining and managing the common property. The fees are typically set by the body corporate, which is the group of owners responsible for the management and maintenance.
Once the costs have been determined, the body corporate will then divide these costs among the owners of the strata properties based on the size and type of their property, as well as any additional amenities or services that they may be entitled to. For example:
- Owners of larger properties or properties with more amenities may be required to pay a higher body corporate fee than owners of smaller properties or properties with fewer amenities.
- Owners of properties with a higher value may be required to pay a higher body corporate fee than owners of properties with a lower value
How often do I have to pay body corporate fees?
Body corporate fee are typically paid on a monthly or quarterly basis. However, The frequency of the payments will depend on the terms of the strata scheme or community title development, and may be set by the body corporate or determined by the owner.
Important note: Make sure to carefully review the terms of the strata scheme and the fees charged by the body corporate, and to understand all obligations and responsibilities with regards to paying body corporate fees.
Can I claim body corporate fees on tax?
Body corporate fees are generally non tax deductible for individual taxpayers. However, if you use the property for income-producing purposes, such as renting it out as an investment property, you may be able to claim a deduction for a portion of the body corporate fees as part of your overall rental property expenses.
You should keep records of your body corporate fees and consult with a tax professional or the Australian Taxation Office (ATO) to determine whether you are eligible to claim a deduction.
Tips for managing your body corporate fees?
There are several things you can do to help manage your body corporate fees:
- Stay informed about the expenses and budget of your body corporate. This will help you understand why you are being charged certain fees and where your money is going.
- Get involved in the decision-making process. If you are a member of the body corporate, you can attend meetings and vote on how the budget is allocated.
- Consider setting up a sinking fund. A sinking fund is a savings account that is used to pay for future expenses, such as major repairs or renovations. By contributing to the sinking fund, you can help spread the cost of these expenses over time and avoid large, unexpected fees.
- Look for ways to save money. For example, you could switch to energy-efficient lighting or appliances to reduce your electricity bills. You could also negotiate bulk discounts on supplies or services that are used by the body corporate.
- If you are having trouble paying your fees, talk to the body corporate manager or treasurer. They may be able to work with you to come up with a payment plan or find other solutions to help you manage your fees.
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*The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Joust recommends that you consider whether it is appropriate for your circumstances. Joust recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.
