By Varun Agarwal, co-founder of PropRetire · Published 8 Nov 2026 · Law as read 8 Nov 2026 · 2 min read

Are body corporate fees tax deductible on a rental?

Mostly, yes. The regular strata levies on a rental unit, paid to the administration fund and the general sinking fund, are claimed in the year they are incurred.

A special levy for a particular improvement is not, though the work it pays for may later be claimed as capital works.

Regular payments to the administration fund or the general purpose sinking fund, for ongoing administration and general maintenance. The ATO treats them as paying the body corporate for its services.

They are claimed in the income year they are incurred, under section 8-1 of the Income Tax Assessment Act 1997. The ATO's page on common rental expenses sets this out.

Not when it funds a particular capital improvement, such as new balconies. That holds whether the body corporate puts it in a special purpose fund or the general purpose sinking fund.

The levy is part of what the improvement cost, not a payment for a service.

A special levy for a repair, such as repainting where the paint is peeling, is claimed in the year it is incurred, as a repair. One that fixes a defect already there when the unit was bought isn't.

Once the work is done, its cost may be claimed as capital works, generally at 2.5% a year for 40 years. The claim starts when the work is completed, not when the levy is paid.

Capital works claimed, or that could have been claimed, also come off the cost base when the unit is sold, as depreciation and capital gains tax explains.

What the levies already pay for. When they cover costs such as garden upkeep, repairs and the building's insurance, those aren't claimed again as costs of their own.

Insurance the owner takes out alone, such as landlord insurance, is a separate bill.

Say a unit's levies are $1,100 a quarter to the administration fund and $400 to the sinking fund. Over 2026-27 that is $6,000, claimed that year. A $3,000 special levy for new balconies isn't, and once they are built it is $75 a year as capital works.

The rental property tax calculator takes a year's rent and costs like these. For comparison, see the ATO's 2023-24 figures for landlords in postcode 3000, central Melbourne.

The levies still count in the rental's yearly result. What changes from 2027-28 is where a loss can go, for a home bought under a contract from 7.30 pm Canberra time on 12 May 2026 that isn't a new dwelling.

Whether the negative gearing change applies turns on that contract date.

Each levy notice, with the fund it is paid to, and the body corporate's notice for any special levy saying what it pays for. Keep the date the work was finished, as the capital works claim runs from then.