Body Corporate Fees Tax Deduction Australia: Can You Claim Them?
Published 13 June 2026 · 7 min read
Quick Answer
Yes, body corporate fees on an investment property are fully tax deductible as a rental property expense in the year they are paid. If you live in the property yourself (owner-occupied), you cannot claim them. If you run a business from a strata-titled property, a portion may be deductible. This guide covers the rules, what counts, and what doesn't for FY 2025-26.
What Are Body Corporate Fees?
Body corporate fees (also called strata levies or owners corporation fees) are regular payments made by owners of units, apartments, and townhouses in a strata-titled complex. These fees cover the ongoing costs of maintaining and managing the shared areas of the building or development.
Body corporate fees typically fall into two categories. Administrative funds cover day-to-day costs like cleaning, gardening, insurance for common areas, and building management. Sinking funds (or capital works funds) cover major long-term repairs and replacements like roof replacement, lift upgrades, repainting, and structural maintenance.
Most owners pay these fees quarterly or annually, and the amount depends on the size of the lot, the facilities available, and the age of the building. Swimming pools, gyms, concierge services, and lifts all push fees higher.
Can You Claim Body Corporate Fees on a Rental Property?
If you own an investment property that is rented out to tenants, body corporate fees are 100% tax deductible in the financial year they are incurred. The ATO treats them as a rental property expense, similar to council rates, repairs, and property management fees.
This applies to both the administrative fund contribution and the sinking fund (capital works) component. However, the tax treatment of each differs slightly. The administrative fund portion is claimed as an immediate deduction under rental property expenses. The sinking fund portion may also be claimed immediately if the levy is specifically for maintenance or repairs.
If a special levy is raised for major capital improvements (rather than repairs), it may need to be claimed over several years as capital works depreciation. Most standard quarterly body corporate fees are fully deductible in the year paid. Use our income tax calculator to see how your rental deductions affect your overall tax position.
Body Corporate Fees: Deductible vs Non-Deductible
The deductibility of body corporate fees depends entirely on how you use the property. Here is a clear breakdown of what you can and cannot claim:
| Property Use | Body Corporate Fees Deductible? | Notes |
|---|---|---|
| Rental property (fully tenanted) | Yes — 100% | Claim as rental expense in the year paid |
| Rental property (vacant, actively marketed) | Yes — 100% | Still deductible while genuinely available for rent |
| Owner-occupied home | No | Private expense — not tax deductible |
| Partially rented (e.g. live in one room, rent another) | Yes — partial | Claim based on percentage of floor area rented |
| Business use from home (strata property) | Possible — partial | Claim portion relating to business area and time |
If you own multiple properties, you claim the body corporate fees for each property separately against that property's rental income. Check our take-home pay calculator to see how rental deductions affect your overall tax bill.
Special Levies and Capital Works
Sometimes a body corporate issues a special levy for major projects like a new roof, lift installation, or structural repairs. The tax treatment of these levies depends on the nature of the work. If the special levy is for repairs and maintenance (fixing something broken), it is deductible immediately. If the levy is for capital improvements (something that adds value or extends the life of the asset), it may need to be claimed as capital works depreciation at 2.5% per year over 40 years.
The ATO distinguishes between repairs (deductible immediately) and improvements (capital in nature). A levy to repaint the entire building exterior might be a repair if the paint was peeling. A levy to install a brand-new gym or upgrade the security system is likely a capital improvement. Keep the body corporate's meeting minutes and levy notices — they often state the purpose, which helps your accountant determine the correct treatment.
If you are unsure, ask the body corporate manager or your tax agent how the levy should be classified. The ATO publishes detailed guidance on rental property expenses in ATO ID 2013/2 and Tax Ruling TR 97/23, which address the distinction between repairs and improvements. Use our Medicare Levy calculator to factor in all your tax obligations together.
How Body Corporate Fees Interact with Other Rental Deductions
Body corporate fees are just one of many deductible expenses for rental property owners. You can also claim council rates, water charges, land tax, property insurance, repairs and maintenance, property management fees, and borrowing expenses (loan establishment fees spread over five years).
All these deductions are netted against your rental income. If total deductions exceed rental income, you have a net rental loss, which can reduce your salary income — effectively saving you tax at your marginal rate. For example, if you earn $100,000 from your job and have $5,000 in net rental losses, your taxable income drops to $95,000, saving you $1,500 in tax at the 30% marginal rate.
| Common Rental Deductions | Typical Annual Amount | Deductible? |
|---|---|---|
| Body corporate fees (admin fund) | $3,000 – $8,000 | Yes — immediate |
| Body corporate fees (sinking fund) | $500 – $3,000 | Yes — immediate |
| Council rates | $1,200 – $2,500 | Yes |
| Property management fees | 5–8% of rent | Yes |
| Building insurance | $800 – $2,000 | Yes |
| Repairs and maintenance | $500 – $5,000 | Yes |
Use our salary sacrifice calculator to see how reducing your taxable income through deductions and salary sacrificing can improve your overall financial position.
Body Corporate Fees vs Strata Fees: Is There a Difference?
In Australia, "body corporate" and "strata" are often used interchangeably, but the terminology varies by state. In New South Wales and Queensland, the term "strata" is more common. In Victoria and Western Australia, "owners corporation" is the official term. Regardless of the name, the tax treatment is identical — fees paid to manage and maintain common property in a multi-unit development.
If you own a unit or apartment in any Australian state, your quarterly levy is tax deductible against your rental income provided the property is tenanted. The ATO does not distinguish between "body corporate fees," "strata levies," or "owners corporation fees" — they are all treated as rental property expenses.
FY 2025-26 Tax Rates for Rental Property Investors
The tax benefit of claiming body corporate fees depends on your marginal tax rate. The higher your income, the more each dollar of deductions saves you. Here is the FY 2025-26 tax rate table:
| Taxable Income Range | Marginal Tax Rate | Tax Saved per $1 of Body Corp Fees |
|---|---|---|
| $0 – $18,200 | 0% | $0.00 |
| $18,201 – $45,000 | 16% | $0.16 |
| $45,001 – $135,000 | 30% | $0.30 |
| $135,001 – $190,000 | 37% | $0.37 |
| $190,001+ | 45% | $0.45 |
The Medicare Levy of 2% applies on top of these rates for most residents. If you earn over $101,000 as a single without private health insurance, the Medicare Levy Surcharge also applies. Check our HECS-HELP repayment calculator if you have a student loan — HECS repayments are also calculated on your taxable income after rental deductions.
How to Claim Body Corporate Fees on Your Tax Return
Claiming body corporate fees is straightforward. You include them in the "Rental property expenses" section of your tax return (Item 21 in the supplementary section for individuals). Most tax agents and online lodgement platforms like myGov will prompt you to list all rental expenses.
Keep all body corporate fee notices, levy statements, and receipts. If the body corporate sends an annual statement showing the total fees paid, that is sufficient evidence. For special levies, keep the meeting minutes and the levy notice to show the purpose of the charge. Your tax agent may ask whether the levy was for repairs or capital improvements.
If you self-lodge through myTax, look for the "Rental properties" section and enter the total body corporate fees under "Other rental expenses." There is no specific line item for body corporate fees — they are included in the general rental expense categories. Enter the total amount and describe it clearly in your tax return notes.
Frequently Asked Questions
Are body corporate fees tax deductible for owner-occupiers?
No. Body corporate fees for your principal place of residence are a private expense and cannot be claimed as a tax deduction. Only properties that generate rental income or are genuinely available for rent qualify for deductions.
Can I claim body corporate fees on an investment property that is vacant?
Yes, provided the property is genuinely available for rent. If it is vacant because you are actively marketing it for tenants, body corporate fees remain deductible. If it is vacant because you are using it for personal purposes, you cannot claim them during that period.
Is the sinking fund component of body corporate fees deductible?
Yes, standard sinking fund contributions for ongoing capital maintenance are generally deductible in the year paid. The ATO treats the levy as an expense of the year it is incurred. However, if the sinking fund is used for major capital improvements, the deduction may need to be spread over the asset's effective life.
What if I own the property through a company or trust?
The same principles apply — body corporate fees are deductible against the rental income of the entity that owns the property. Companies and trusts claim these expenses in their income tax returns. Check with your accountant about the specific reporting requirements for your structure.
Can I claim body corporate fees from previous years?
Not directly. If you forgot to claim body corporate fees in a previous year's tax return, you can request an amendment within two years (for most taxpayers). The ATO allows you to amend your return to include missed deductions. You cannot claim future fees in advance — they are deductible only in the year they are incurred.