How to minimise council rates and strata costs

Along with reducing the burden of council rates and strata or owner corporation fees, we delve into the ins and outs of land tax to make sure you’re not being taxed inappropriately.

Council rates

By paying your council rates, you ensure the garbage is picked up, sewerage is managed and all the neighbourhood services you depend on are carried out. And though these are important services, council rates can be a significant financial strain at times.

The major determinant of your council rate levy is the value of your property.

The main avenue you have to reduce your council rates is by objecting if you believe the valuation of your property is inappropriately high and hence your rates are inflated. If you experience a sudden jump in your rates, this will be due to an increase in the valuation of your property.

Land valuations are governed by the Valuation of Land Act 1916 and overseen by the Valuer General in your state or territory. Generally, you have 60 days to lodge an Objection to Valuation with your local council if you disagree with the valuation of your property. A corrected valuation can save you hundreds if not thousands of dollars.

If you’re having trouble paying your rates, contact your council immediately. Some councils offer alternative arrangements while you work through a financial hardship. Otherwise, make sure you pay your rates on time so you don’t incur late fees.

Strata and owner corporation fees

Different types of land titles govern different types of properties. Generally, a freestanding home is governed by a Torrens title and apartments or unit blocks are governed by a strata title. Other titles governing units and apartments include company titles and stratum titles.

As an owner of a unit or apartment, you have to contend with strata or owner corporation (body corporate) fees, which cover the costs of maintaining the complex’s common areas and general management. These can amount to significant figures depending on the level of ongoing maintenance the building requires.

It is important you don’t accept strata spending or fee hikes without understanding their basis. You also have the right to contest upgrades, repairs or renovations that you don’t deem necessary. Strata committees and approval processes differ, but if you’re unhappy or disagree with the management of your building, review your strata guidelines and learn about your rights.

Your local fair trading or consumer affairs office is an important resource. They handle strata and owner corporation disputes and mediate through tribunals. If you want a greater say in the running of your building, look to become a member of the managing committee. By buying your apartment or unit, you automatically become a member of the strata, but members are then elected to the managing committee.

Look for ways to increase your complex’s energy-efficiency, and implement strategies to cut overall utility bills. Suggest an audit of your building’s strata insurance premium, and compare other policies on the market to ensure your complex’s policy is up to date. Our comprehensive insurance guide offers many practical tips to reduce costs.

Land tax

Across Australia, a land tax levy is applied annually to vacant land, holiday homes, investment properties and primary production land that isn’t exempt.

Your home (primary residence), transitional home or land used for certain types of primary production are generally exempt from land tax. As a homeowner, you should be able to obtain land tax exemptions from your state or territory government. For more information, check with your region’s state revenue office to ensure you’re not paying unnecessary land tax.

The threshold for land tax levies varies between the state and territories, but for land under a certain value (for example, below $412,000 in New South Wales and $250,000 in Victoria) you will be exempt from paying land tax. The land tax rate is scaled to the value of the property and calculated as a percentage of its taxable value. Valuations are conducted annually and can be contested if you believe it is unduly high. There are property valuation firms that specialise in land tax valuations. You should always use an accredited valuer.

Continue reading the Guide to Cutting Homeowner Costs with: A checklist for cutting homeowner costs