Council rates and strata levies are two of the running costs that keep landing on an investment property’s ledger whether or not it has a tenant in it. Both reduce the cash left in your pocket after rent comes in — but they’re set by different bodies, for different reasons, and one of them only applies to some properties.

How do council rates and strata levies affect your cash flow?

Both are recurring cash outflows that a property owner pays on a fixed schedule, regardless of whether the property is tenanted. Council rates are a local government charge on every rateable property, based on the council’s valuation of the land or property. Strata levies are collected by an owners corporation (also called a body corporate) from owners in a strata or community-titled scheme, to cover the costs of maintaining common property. Neither is optional once you own the property, and neither pauses because a tenant moves out — so they sit alongside your loan repayments as part of the “outgoings” side of your rental cash-flow equation, whether the income side is full or empty that month.

The quick reference below sets out how the two compare, plus a third cost — land tax — that’s easy to confuse with council rates but works on entirely different rules.

Cost	Who sets it	Applies to	Billed regardless of tenancy?
Council rates	Local council	Every rateable property in that council area	Yes
Strata levies	Owners corporation / body corporate	Strata or community-titled properties only (most standalone houses on their own title don’t pay them)	Yes
Land tax	State or territory revenue office	Land value above a threshold that varies by state; your main residence is generally exempt	Yes, once you’re above the threshold

What exactly are council rates?

Council rates are an annual charge your local council levies to fund local services — things like roads, waste collection, parks and libraries — calculated from the council’s valuation of your property or land. Every property owner in that council area pays them, whether the property is owner-occupied, rented out, or sitting vacant. The tenant doesn’t pay council rates; as the owner, you do, and the amount is set by your specific council rather than by any state or federal formula, so it varies from one council area to the next.

Because the charge attaches to ownership rather than occupancy, a rates notice keeps arriving even during a vacancy between tenants — it’s one of the costs that doesn’t take a break just because the rental income does.

What exactly are strata levies (and when do they apply)?

Strata levies only apply if your investment property sits within a strata or community title scheme — most commonly an apartment, unit, or some townhouse and villa developments. A standalone house on its own separate title generally isn’t part of a strata scheme and doesn’t pay strata levies (though it may still face other shared costs in some estate or community arrangements).

Where a scheme does exist, the owners corporation collects levies from every owner to maintain and insure the common property — foyers, lifts, roofs, shared gardens and the like. Levies are commonly split into two broad buckets: a fund for day-to-day running costs, and a separate fund set aside for bigger, less frequent capital works. The exact terminology, contribution rules and voting process for raising levies are set by each state or territory’s own strata legislation and regulator, so the mechanics can differ depending on where the property is — your scheme’s by-laws, levy notices and AGM minutes are the specific documents that tell you what applies to a given property.

Our comparison of houses, townhouses and apartments for investment goes further into how strata exposure differs by property type if you’re still weighing that trade-off.

How do you work these costs into your cash flow?

Cash flow from a rental property is what’s left after every outgoing is subtracted from rental income — loan repayments (for most geared investors, usually the largest single line item), council rates, strata levies, insurance, property management fees and maintenance. Rather than a single “typical” number, the useful tool here is the net rental yield formula, which forces every recurring cost onto the table:

Net rental yield = (annual gross rent − annual operating expenses) ÷ property value × 100

The Australian Government’s Defence Housing Australia names council rates, water rates and body-corporate/strata fees explicitly among the expenses that formula subtracts, alongside insurance and any service fee. Whichever “property value” you use — purchase price or current value — state which one, because the two give different results as values move over time.

One distinction worth holding onto: a percentage-based property management fee only applies while a tenant is paying rent. Council rates and strata levies generally don’t work that way — they’re billed on a fixed schedule regardless of whether the property is tenanted. A vacancy doesn’t pause these two costs; it just removes the income they’d otherwise be measured against.

If you invest through a fractional platform rather than owning a whole property outright, these running costs still have to be accounted for somewhere in the numbers before any return reaches you. On MyBrix, for example, Net Rental Proceeds (rent left after the property’s rental management fee) are distributed monthly to Brix holders in proportion to their holding at the time of distribution. Exactly how a specific property’s other running costs, including council rates and strata levies, are treated ahead of that figure is set out in that listing’s own disclosure documents — check the Product Disclosure Statement and Target Market Determination for the property in question rather than assuming one standard treatment.

Our guide to cash-flow-positive vs negatively geared property and our walkthrough of gross vs net rental yield both build on this same formula if you want the fuller picture.

Are council rates and strata levies tax deductible?

Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.

As a general matter, the ATO’s rental properties guide describes negative gearing as what happens when you buy a rental property using borrowed funds and your rental income is less than your deductible expenses, including loan interest: “the tax result of negatively gearing a property is that a net rental loss arises,” and you may be able to claim a deduction for the full amount of your rental expenses against rental and other income, carrying any unabsorbed loss forward if needed. That’s the framework costs like council rates and strata contributions sit inside — but the ATO’s own guidance also narrows what counts as a deductible expense in the first place: if a property isn’t genuinely available for rent the whole time, or you use part of it privately, deductions are apportioned rather than claimed in full. Not every levy is necessarily treated the same way, either — a one-off special levy an owners corporation raises for a major capital works project can carry a different character to your regular quarterly levy. A registered tax agent can confirm how a specific rates notice or levy applies to your own return.

Current law (as at July 2026) places no general dollar cap on the resulting loss and no restriction on offsetting it against other income. That’s set to change from the 2027-28 income year: legislation given royal assent on 26 June 2026 will generally quarantine future residential rental losses so they can only be offset against residential rental income or residential capital gains, not against salary or other income — though interests acquired before 7:30pm AEST on 12 May 2026 are grandfathered under the existing rules. As at July 2026, that quarantine hasn’t started yet; current-law treatment described above still applies for now.

Is land tax the same as council rates?

No. Land tax is a separate, state or territory-level tax on the value of land you own above a threshold — it’s assessed by that state’s revenue office, not your local council, and (unlike council rates) it generally doesn’t apply at all until your land value crosses the relevant threshold; most owners’ main residence is also exempt. Because it’s set state by state, there’s no single national figure, and it moves at each jurisdiction’s own budget. The snapshot below is as at July 2026 — always check the relevant revenue office directly before relying on a figure, and don’t assume a bracket you’ve seen for one state applies in another.

State/territory	Tax-free threshold (individuals, general land tax)	Source
Victoria	$50,000 of taxable Victorian land value (a $500 minimum applies at exactly $50,000; trust surcharge threshold is $25,000)	State Revenue Office Victoria
New South Wales	$1,075,000 of combined taxable NSW land value (frozen under the 2024-25 NSW Budget rather than indexed annually)	Revenue NSW
Queensland	$600,000 of total taxable Queensland freehold land value	Queensland Revenue Office
Western Australia	$300,000 of aggregated taxable WA land value	WA Department of Treasury and Finance
Tasmania	$125,000 of assessed Tasmanian land value	State Revenue Office Tasmania
Australian Capital Territory	No tax-free threshold at all — instead a fixed charge plus a scale based on Average Unimproved Value	ACT Revenue Office
South Australia	$936,000 of total taxable South Australian site value for the 2026-27 land tax year (trust threshold $25,000); thresholds are re-indexed annually by gazette	RevenueSA
Northern Territory	No land tax at all — the only Australian jurisdiction with none	Northern Territory Government

This table covers all eight Australian states and territories — every figure independently confirmed on that jurisdiction’s own revenue office as at July 2026. SA’s threshold moves with annual gazettal and every jurisdiction’s setting can move at its own budget, so always check the relevant revenue office directly before relying on a figure, and don’t assume a bracket you’ve seen for one state applies in another.

Tax outcomes depend on your circumstances — speak with a registered tax agent before acting if you’re trying to work out whether land tax applies to your specific holdings.

Factoring these costs in before you buy

Investors researching a property commonly review the most recent council rates notice and, where a strata scheme is involved, the owners corporation’s latest levy notice and AGM minutes, as part of estimating likely running costs before they buy. Neither document tells you what will happen to a property’s value — but both tell you, in black and white, what the ongoing cash outflow already looks like, which is a direct input into your own cash-flow modelling regardless of which state or property type you’re considering.

For the broader mechanics of how rental income, costs and growth fit together in a property investment, see our guide to what property investment in Australia actually involves.