Understanding Strata Properties: What You Need to Know Before Buying

Quick answer: A strata property is a unit, townhouse or villa where you own your lot and share ownership of the common property with the other owners. You pay levies for upkeep, and by-laws set the rules. Before you buy, read the strata report, the by-laws and the financial records, and get a building inspection.

Updated 28 October 2026. Rules and figures checked on NSW Government and Australian Taxation Office pages the same day. Names and rules differ between states: for example, owners corporation in NSW and Victoria and body corporate in Queensland.

Key facts, checked 28 October 2026

Four dated facts show what to check before you buy a strata property and how the costs are treated for tax. Each comes from an official page checked on 28 October 2026.

• The NSW Government says to get a strata report and a building inspection report and to read the by-laws. A strata search report covers the scheme's finances, insurance, building defects and planned works, legal matters and meeting notes (NSW Government, Buying a strata property, last updated 1 April 2026).
• A section 184 certificate shows any outstanding levies for the lot and the proposals for funding the 10-year capital works plan, and the NSW Government warns that low levies could mean a steep rise in future fees (NSW Government, last updated 1 April 2026).
• A NSW scheme must have an administrative fund for day-to-day costs and a capital works fund, previously called a sinking fund, backed by a 10-year capital works fund plan that must be reviewed at least every five years (NSW Government, Managing strata finances and insurance, last updated 22 June 2026).
• For a rental property, administration fund fees are deductible in the year you incur them, but a special purpose levy for capital works is not immediately deductible (ATO, Body corporate fees and charges, checked 28 October 2026).

What Is a Strata Property? 

A strata property refers to a complex of buildings or land that is divided into individual units or lots. These could be apartments, townhouses, villas, or even duplexes. When you buy a strata property, you purchase the ownership of your unit or lot, but also share ownership of the common areas with other residents. Common areas typically include things like hallways, lifts, shared gardens, parking areas, swimming pools, and other shared amenities. 

You own your unit or lot outright, but you have a shared responsibility for maintaining the common property and managing the building’s affairs. This is typically managed by the body corporate or the owners’ corporation—a group made up of the individual owners of the units. The role of the body corporate is to make decisions about the management of the building, and enforce rules and by-laws that govern how the property is used. 

What Do You Own and What Do You Share? 

Understanding the difference between what you own and what is shared is crucial in a strata setting:

• • Private Property (Your Unit/Lot) 

This is the portion of the property that you own outright. It could be an apartment, townhouse, or villa, and you have full control over what happens inside it, subject to any applicable rules and regulations. You can make decisions about your interior space (renovations, interior design, etc.), but you must comply with the strata’s guidelines.  

• • Common Property 
    This includes any area or space that is not individually owned. For example, shared hallways, exterior walls, roof, gardens, lifts, and stairwells are considered common property. All the owners in the strata jointly own these areas, and together they’re responsible for maintaining and managing them. 

As an owner, you contribute to the upkeep of common property through strata fees, which are mandatory payments that go toward the maintenance and management of shared areas. 

Understanding Strata Fees 

Strata fees are regular contributions paid by owners of properties within a strata complex. They are essential for funding the management and upkeep of common areas. These fees are typically charged quarterly, but they can vary depending on the size and complexity of the building or complex.

The money you pay in strata fees is placed into a fund that is managed by the body corporate. It is used to cover the day-to-day costs and larger-scale maintenance projects. The amount you pay is often calculated based on the size of your property (e.g., the number of square meters your unit occupies) and the proportion of the building that it represents.

Failing to understand or plan for strata costs can result in serious financial strain, especially for those managing investment properties. A special levy or a rise in strata fees adds to your holding costs, so allow for it in your budget before you buy.

There are three primary types of strata fees: 

1. Administration Fund Levies (Operational Fees) 

The administration fund is primarily used to cover the ongoing day-to-day costs associated with running the strata complex. These are the operational costs required to ensure that common areas are clean, safe, and well-maintained. Some of the most common items covered under this fund include: 

• • Building Cleaning: Regular cleaning of common areas such as hallways, lifts, entryways, and outdoor areas. 

• • Gardening and Landscaping: Maintenance of communal gardens, lawns, and green spaces. 

• • Utilities: The cost of providing services like electricity, water, and gas to common areas (lighting, lifts, and pools). 

• • Building Insurance: Premiums for building insurance that covers common areas against damage or destruction (e.g., from fire, storms, or vandalism). 

• • Routine Maintenance and Repairs: Everyday repairs and small upkeep tasks, like fixing a broken light or cleaning a clogged drain in a shared space. 

The administration levy ensures that the essential services that benefit all owners are maintained regularly without unexpected financial strain. Typically, this is the most common levy owners will pay, and it ensures the complex runs smoothly on a day-to-day basis. 

2. Capital Works Levies (Sinking Fund Levies) 

Capital works levies (the NSW Government calls this the capital works fund and says it was previously called the sinking fund) are used to save up for significant maintenance and repairs that arise less frequently but are nonetheless essential. These funds are meant to cover larger expenses that come up every few years and that cannot be paid for out of the administration fund. 

Some of the major expenses covered under this levy include: 

• • Roof Restoration or Replacement: If the roof is nearing the end of its lifespan, funds will be set aside to replace it. 

• • Exterior Painting: Buildings require regular repainting to maintain their appearance and to protect against weather damage. 

• • Major Repairs and Upgrades: These include repairs or replacements for aging plumbing, electrical systems, or structural issues that affect the integrity of the building. 

• • Building Improvements: Adding new features like an elevator, or upgrading shared spaces such as the lobby or gym. 

Capital works levies help avoid large, unexpected financial burdens by creating a savings pool for future repairs. Without these funds, the owners might be asked to contribute extra money (via special levies) when a large repair is required. 

3. Special Levies (One-off Levies) 

Special levies are additional fees that may be charged to owners if there’s a sudden need for repairs or upgrades that were not anticipated during the normal budgeting process. Special levies are typically imposed in the case of: 

• • Emergency Repairs: For example, if a storm causes significant damage to the building’s exterior or a lift breaks down unexpectedly, special levies may be needed to fund the repairs. 

• • Unforeseen Major Works: Sometimes, a problem that wasn’t foreseen during the annual budget process can arise, requiring immediate attention. For example, significant structural issues might be discovered that need urgent repairs, necessitating the imposition of a special levy. 

• • Upgrades or Enhancements: If the owners decide to make significant improvements, like installing solar panels or upgrading a building’s security systems, special levies may be required to pay for these projects. 

Special levies are typically one-off contributions, which can be quite large depending on the scale of the work needed. Owners may need to contribute their share in a lump sum or via installment payments. 

How Strata Fees Are Determined 

Strata fees are determined by the body corporate, and they are typically based on: 

• • The Size of the Property: Larger units usually contribute more to the overall strata fees because they occupy a larger portion of the complex and use more shared resources (e.g., electricity, water). 

• • The Amenities and Facilities: Properties with more extensive amenities (such as pools, gyms, concierge services, and high-security systems) will require higher strata fees to maintain and operate those facilities. 

• • The Age and Condition of the Building: Older buildings may require more frequent or expensive repairs, which can result in higher levies. Newer buildings, particularly those with modern, efficient systems, may require lower fees, at least initially. 

• • Management Quality: The efficiency and effectiveness of the body corporate and strata management team can also affect the levies. If the management is efficient and negotiates good contracts, fees may be kept lower. Poor management can lead to unnecessary costs being passed onto the owners. 

• • Budgeting and Long-term Planning: A well-maintained sinking fund and long-term planning for repairs and maintenance can help keep strata fees more predictable and manageable. Conversely, poor planning can result in more frequent special levies. 

Pros and Cons of Strata Living 

Strata living offers several benefits, but it also comes with some challenges that you should be aware of before committing to a purchase. 

The Pros: 

1. 1. Maintenance and Upkeep Are Taken Care Of: Strata fees cover the cost of maintaining common areas and ensuring the building remains functional. If you don’t want to worry about things like lawn mowing, roof repairs, or plumbing issues in shared spaces, strata living can be a good option. 

2. 2. Access to Amenities: Strata properties often offer access to shared amenities such as pools, gyms, and security features. These are costly to maintain in individual houses but can be affordable when shared among multiple owners. 

3. 3. Community Living: Strata living can provide a sense of community, where neighbors share a collective responsibility for the property’s upkeep and enjoy shared spaces together. 

4. 4. Security and Safety: Many strata complexes have security systems, cameras, and controlled access to the building, which can provide peace of mind. 

The Cons: 

1. 1. Less Control Over Common Areas: While you have control over your own unit, you have limited say in the management of shared spaces or in the decisions made by the body corporate. Major decisions (such as repairs or upgrades) must often be voted on by the owners as a whole. 

2. 2. Strata Fees Can Be Expensive: Depending on the size of the complex, the amenities offered, and the condition of the building, strata fees can be high. These fees are typically paid quarterly and can increase over time due to inflation, increasing maintenance costs, or major repairs. 

3. 3. Potential for Special Levies: Special levies can be imposed unexpectedly if there is a major repair or unexpected cost. This could mean a significant financial burden at short notice. 

4. 4. Rules and By-laws: Strata properties are governed by rules and by-laws that can limit what you can do with your property. For example, you may face restrictions on things like keeping pets or making certain renovations. 

Due Diligence When Buying a Strata Property 

Before buying a property in a strata, it’s essential to conduct thorough due diligence: 

1. 1. Review the Strata Records and Financials: Ask for access to the financial statements of the body corporate and review the history of strata fees and levies. This will give you an idea of how well the building is managed financially and whether there are any upcoming costs or repairs that might affect you. 

2. 2. Check the Condition of the Property: Have a building inspection done to check for any current or potential issues with the property (see what a building and pest inspection costs). Look out for any deferred maintenance or repairs that may require substantial costs in the future. 

3. 3. Understand the By-Laws: Review the by-laws of the strata scheme to understand what’s allowed and what’s not. For instance, if you’re planning to rent out your unit, make sure there are no restrictions on leasing or short-term rentals. 

4. 4. Assess the Age and Condition of the Building: Older buildings may require more maintenance, and if a major upgrade or repair is needed, strata fees may increase.

Is a strata property a good investment? 

Strata properties can suit buyers who value shared maintenance and amenities, but they come with ongoing costs that need to be weighed against the rent or the lifestyle you want. Whether one is a good investment depends on the building, the levies, the strata report and the location, so check each before you commit.

How to check a strata report before you buy

A strata search report shows the scheme's finances, insurance, building defects and planned works, legal matters and meeting notes. Read it with the by-laws and the section 184 certificate before you exchange contracts, compare the fund balances with the 10-year plan, and ask your conveyancer or solicitor about anything that worries you.

1. Compare the administrative fund and capital works fund balances with the 10-year capital works plan.
2. Look for outstanding levies and planned special levies on the section 184 certificate.
3. Read the meeting minutes for disputes, defects and repairs under discussion.
4. Check the insurance and the date it was last reviewed.
5. Read the by-laws, including any rules on pets, renovations and short-term rental.

Are strata fees tax deductible for an investment property?

For a rental property, the ATO says administration fund fees are deductible in the year you incur them, and general-purpose sinking fund contributions can be claimed too. Special purpose levies for capital works are not immediately deductible, but a capital works deduction of 2.5% a year for 40 years may be claimed once the work is finished. In an ATO example, a $10,000 special purpose levy cannot be claimed straight away and is claimed at 2.5% for 40 years once the work is completed (ATO, checked 28 October 2026).

Your accountant can confirm how your own levies are treated, because the answer depends on what each levy pays for.

Frequently Asked Questions 

1. What are strata fees, and how are they calculated? 

Strata fees cover the maintenance of common areas and are based on the size of your unit and building amenities. 

2. Can I renovate my unit in a strata property? 

Yes, but renovations must comply with the strata by-laws. Approval may be required for structural changes. 

3. What happens if I don’t pay my strata fees? 

Failure to pay strata fees can result in penalties or legal action from the body corporate. 

4. Are strata fees tax-deductible? 

For a rental property, the ATO says administration fund fees are deductible in the year you incur them, but special purpose levies for capital works are not immediately deductible. Ask your accountant how your levies are treated. 

5. Can I keep pets in a strata property? 

It depends on the by-laws of the strata scheme. Some properties allow pets, while others may have restrictions.

More questions about buying a strata property

What is a section 184 certificate?

In NSW, a section 184 certificate comes from the owners corporation. It shows any outstanding levies for the lot, the proposals for funding the 10-year capital works plan, where the records and financial statements can be viewed, and recent by-laws (NSW Government, last updated 1 April 2026). Ask your conveyancer to check it.

What is the difference between the administrative fund and the capital works fund?

The administrative fund pays day-to-day costs such as insurance, electricity, water and garden maintenance. The capital works fund, previously called the sinking fund, pays for major work such as roofing or lifts and is guided by the 10-year capital works fund plan (NSW Government, last updated 22 June 2026).

Can I rent out a strata unit on Airbnb?

It depends on the scheme's by-laws and your state and council rules, so check before you buy. In NSW, a short-term rental host must give guests the by-laws that apply to the premises if the property is in a strata scheme (NSW Government, last updated 22 September 2025). Ask your solicitor about any by-law on short-term letting.

Sources

• NSW Government: Buying a strata property (last updated 1 April 2026, checked 28 October 2026)
• NSW Government: Managing strata finances and insurance (last updated 22 June 2026, checked 28 October 2026)
• NSW Government: Host obligations in short-term rental accommodation (last updated 22 September 2025, checked 28 October 2026)
• ATO: Body corporate fees and charges for rental properties (checked 28 October 2026)

This article is general information and is not legal, tax or financial advice. Strata rules differ by state and change over time; speak to a solicitor or conveyancer and an accountant before you buy.

If you want help checking a strata property before you offer, see our home buyers agent or investment property buyers agent service, or read our guide to new vs established investment property.