Council Rates vs Strata Levies: What's the Difference?
Two of the most common property expenses — but many investors still mix them up. Here's a plain-English breakdown of both.
Council rates and strata levies are two of the most consistent expenses in any property investor's annual budget — but they serve completely different purposes, come from different bodies, and have different tax treatment. If you've ever wondered exactly where your money is going, here's the full picture.
Council Rates: What They Are
Council rates are a local government tax levied on property owners to fund local services: road maintenance, waste collection, parks, libraries, and local planning. They're calculated based on the assessed unimproved capital value of your land, multiplied by a rate in the dollar set by your council each year. For investment properties, council rates are typically billed quarterly and are the responsibility of the owner, not the tenant.
Strata Levies: What They Are
Strata levies only apply to strata-titled properties — apartments, townhouses, and some commercial suites. They're fees collected by the owners corporation to cover the cost of managing and maintaining common property: gardens, lifts, pools, lobbies, building insurance, and building management fees. There are typically two types: the administrative fund levy (day-to-day expenses) and the capital works fund levy (building up reserves for major future works).
Are Both Tax Deductible?
Yes — both council rates and strata levies are fully deductible against rental income for investment properties, as long as the property is rented or genuinely available for rent during the period you're claiming. Neither is deductible for your principal place of residence.
Budgeting for Both
Treat council rates and strata levies as separate line items. Council rates are relatively stable year-on-year (typical increases of 2–5%). Strata levies can vary more significantly, especially if the owners corporation is building reserves for major upcoming works. When doing due diligence on a strata purchase, always review the strata financials to understand whether the sinking fund is adequately funded — a poorly-funded fund often signals a special levy is coming.