Tips for budgeting for body corporate fees
Tips for budgeting for body corporate fees.
When I purchased my first strata title property, I found the thought of body corporate fees overwhelming. These fees can range from less than $1,000 to $25,000 per year so it’s imperative to remember to budget for these costs - here are a few tips that helped me.
Body Corporate fees are typically divided into two funds such as administration fund and a sinking fund. The administration fund covers basic administration, maintenance and insurance whilst the sinking fund is used for replacement of big ticket items, such as painting, lifts or structural repairs to the building.
- Break down the cost
For me, the easiest way to see where my money was going was to start by calculating how much your admin and sinking fund is per year then break that cost down into an amount each week. By doing this and setting that money aside you’re not scrambling amount for the cash last minute.
- Communicate openly with your body corporate
It is imperative to stay actively involved with your body corporate by communication, attending general meetings, reading through the committee minutes and regularly keeping up to date with emails/letters and checking for body corporate budget changes or updates. This way you’ll be aware of changes or big projects coming up in the near future and if you are on the committee you can get involved and offer opinions/alternatives or maybe refer a well-known contact who could get the job done cheaper.
- Thoroughly review the budgets
Every financial year a budget is required for both the administration and sinking fund. If you believe that a budget is unreasonably high you have the right to vote against any motion to approve the budget. If this isn’t successful you may look into getting alternative budgets that you believe are reasonable and necessary, with supporting documentation on proposed costs.
- Consult your accountant
Like many fees associated with an investment property it’s important to remember that most body corporate fees are tax deductible. Consult your accountant to learn more about what fees you can claim for and how much. As a general rule, the ATO considers money paid for admin and sinking funds as tax deductible.
Whether you are a first home buyer, or thinking about purchasing a strata title I hope you have taken something from this article.