Strata fees, also known as levies, are regular payments made by owners of properties within a strata scheme in Australia. These fees are crucial for the maintenance and management of shared areas and facilities within a building or complex, ensuring the smooth operation and upkeep of the property. Understanding the meaning of strata fees in Australia is important for both current owners and prospective buyers in a strata-titled property.

What Are Strata Fees?

Strata fees are contributions made by the owners of individual lots within a strata scheme. These fees are collected by the Body Corporate, also known as the Owners' Corporation, which is responsible for managing the common areas of the property. The primary purpose of strata fees is to fund the maintenance, management, and insurance of these shared spaces, ensuring that all owners collectively share the costs associated with the upkeep of the property.

What Do Strata Fees Cover?

1. Maintenance of Common Property

The ongoing care, repair, and upkeep of common property, such as gardens, swimming pools, lobbies, and hallways, are financed through strata fees. Regular maintenance ensures that these areas remain in good condition, preserving the overall value and aesthetic appeal of the property.

2. Utilities for Common Areas

Strata fees cover the cost of utilities used in common areas, such as electricity for lighting, water for gardens, and power for elevators. These utilities are essential for the functionality and comfort of all residents.

3. Strata Management Fees

Hiring a strata management company or a strata manager is another significant cost covered by strata fees. The strata manager oversees the day-to-day operations, handles administrative tasks, and ensures compliance with relevant regulations, contributing to the efficient management of the strata scheme.

4. Insurance for the Building and Common Areas

Insurance is a mandatory expense covered by strata fees. This insurance typically includes coverage for the building’s structure and common areas against risks such as fire, storm damage, and liability issues. The cost is shared among all owners, providing financial protection for the entire community.

Types of Strata Fees

1. Administrative Fund Levies

These levies cover the everyday operational costs of the property, including cleaning, gardening, minor repairs, and utility bills. The funds are used to manage the property’s routine expenses.

2. Sinking Fund Levies

Also known as the capital works fund, sinking fund levies are set aside for long-term, major repairs or replacements, such as roof repairs, painting, or replacing elevators. This fund ensures that there are adequate reserves to cover large, infrequent expenses.

3. Special Levies

In some cases, additional funds may be required for unexpected expenses or significant upgrades. Special levies are raised to cover these costs when the existing funds are insufficient. These levies are typically agreed upon by the owners through a voting process.

How Are Strata Fees Calculated?

The amount of strata fees an owner pays is determined by several factors, including the size of their lot, the number and type of amenities, the location of the property, and the age of the building. Fees are calculated based on unit entitlement, which reflects the proportionate value of each lot compared to the entire property. Larger units or those with more amenities generally attract higher fees.

How Often Are Strata Fees Paid?

Strata fees are usually paid on a quarterly basis, although the frequency can vary depending on the strata scheme’s by-laws. Owners are expected to contribute regularly to ensure that the property’s financial obligations are met on time.

Are Strata Fees Tax Deductible?

For property investors, strata fees can be tax-deductible. The Australian Taxation Office (ATO) allows deductions for contributions made towards administrative and sinking funds. However, it’s essential to maintain proper records and seek advice from a tax professional to understand which expenses qualify for deductions.