Special Levy - can't beat the owner's corp

Hi All,

Just wondering if anybody has experienced or can shed light on possible solutions to my prob:

Situation:
Owners Corp has decided to carry out fascade work on our building.
Cost of $10K in the form of special levy along with taking money out of the sinking fund.
We are the only owner occupiers in the block of 6.
Voting at the extraordinary meeting has occured, with 3 votes to 1 for the works.

Our dilemma:
1 ) From our quotes and inspection of licensed builders, they all said it was not necessary for the works to be carried out.
2) We simply can not fork out $10k in cash for the strata works.
3) We do not want to be forced to sell
4) We've pleaded our case with the other owners, and the strata manager has been of no help at all either.
5) Is there anyway the $10K strata levy be a tax deduction?

Any advice or comments most welcome.
 
Why isn't the special levy a deduction?

My assumption is that they are tax deductible but now thinking about it there would be capital treatments in there - must ask the accountant how he treats these.:eek:

Cheers
 
One option may be to source a cheaper quote for them?

Leaving aside the fact that they are owner occupiers, for investors there is a distinction, for tax deducability purposes, between body corp contributions and special levies. The latter are deductable as capital works (eg 2.5%), the former are deductable in the year in which they occur.
 
Maybe you can get the money by increasing your loan by $10K Manageacc?

Or maybe a couple of 6 month interest free credit cards?
But only if you can do the right thing, and pay them off in 6 months!
7 or 8 months isn't so bad I guess, but you know what I mean.
 
Our dilemma:
1 ) From our quotes and inspection of licensed builders, they all said it was not necessary for the works to be carried out.
This does not sound like the whole story.
Why would owners vote to spend money un-necessarily? :confused:
What kind of quote do you get from a builder that also says - oh by the way, these works that I've quoted on don't actually need to be done?

2) We simply can not fork out $10k in cash for the strata works.
Perhaps as others have mentioned, a low IR credit card? or a 2nd mortgage / drawn down on your LOC / existing mortgage?

3) We do not want to be forced to sell
This often happens to older residents in units. When they cannot get funds to do repairs / special strata levies, they are forced to sell :(

4) We've pleaded our case with the other owners, and the strata manager has been of no help at all either.
That's the BC rules - majority vote. One of the downsides of unit dwelling.
 
We owned a unit in a complex of 80 where the resident manager was keen to have electronic gates fitted as the complex was used as a shortcut by residents of canal side houses who walked along the canal and through our complex to the shops.

As it was deemed an improvement, it required 100% approval from the owners. The manager sent out information including RE valuations that showed that the $500 expenditure per unit would result in a $5K increase in the value of each unit.

He managed to get the improvement approved.

Maybe things are different in NSW. I suggest you contact the body corporate administration centre (probably a government department) and check that a majority vote is valid.
Marg
 
body corporates can borrow for these kind of things, that might be a better solution in your case? It might also suit the other owners who dont then have to come up with $10k and instead just need to increase their ongoing costs to pay the body corp loan....
 
There must be something seriously wrong with your place. Why on earth would the other owners (who don't even live there) want to pay $10k each (ie $60k between the 6 of you) and also take money out of the sinking fund to do repairs?

They're only investors and it's not like they're going to do anything that's unnecessary.

Must be something really seriously wrong with your facade, in which case the repairs are probably justified? Hate to say but if that's the case, tough luck.
 
What works is required? The quotes should have been sent to you?

I had another situation, although on a much smaller scale. Body corporate decided the guttering needed replacing. Sourced quotes and majority voted for the most expensive quote there was?? Even though there was another company who could do the same job for less!
 
There must be something seriously wrong with your place. Why on earth would the other owners (who don't even live there) want to pay $10k each (ie $60k between the 6 of you) and also take money out of the sinking fund to do repairs?

They're only investors and it's not like they're going to do anything that's unnecessary.

Must be something really seriously wrong with your facade, in which case the repairs are probably justified? Hate to say but if that's the case, tough luck.

Not necessarily so. Some of the investors may be looking at a quick profit and want to improve the facade in order to increase the sale price.

I have been in a similar situation during the recent boom where units in a complex where I own were turning over at profit very frequently. New owners wanted to bog and flog to maximise profit and I was the only dissenting voice. The other members of the Body Corp took me to the tribunal.

I was perplexed at their actions as anyone who bothered to read the strata corp rules could see that they were lost without 100% agreement. It was definitely a situation of intimidation, trying to scare me with threats of lawyers and Supreme Court action, warning me that they would send me broke fighting them. It was a very nasty situation where some members were constantly ringing me at home and trying all sorts of tricks to get me to change my mind. When the hearing was due, I simply documented and submitted my decision against the improvements along with copies of letters to the BC where I had stated a clear NO vote.

As I fully expected, it turned out that as stated in the relevant rules, the improvements were all capital improvements and would also change the outward appearance of the complex, both requiring unanimous approval from the BC. And of course as they were improvements, not tax deductible.

Breath easy, they can jump up and down and shake their tiny fist as much as they like, they don't have a leg to stand on. Only maintenance issues can be decided by a select few, improvements or changes to the appearance of the complex must be unanimous. There are rules to protect you from people like this.

Just make sure you document your decision by writing to the BC clearly stating your decision and demand that they desist with any further action in relation to the improvements. If they ignore your wishes and they go ahead anyway, they will be liable for returning the property to it's original state.

Cheers,
Beef.
 
Manageacc

If it does not need to be done what is the justification for doing it?
WIll it improve the value
What actually is that is being done?
What is the cost, you say you can't fork out 10k, is it 10k per unit or 10k for the total job, how many units are there.
This is what happens with units, too many people only want to put in what is necassary to survive a financial year and not think of long term. In VIC for instance all new developements must have a sinking fund so these type of surprises don't occur.

Jezza
 
Move out and rent it out for 6 months when the bill comes in?

Not sure about the legalities of that one, I'm no accountant, but what I do know is the expense of moving twice and renting for 6 months will far outweigh any tax deductions on a 10k expense. Especially one that is capital improvement anyway.

Bill I read it as 10k each, and the point is the improvements are unnecessary, unwanted and unaffordable to manageacc.

The only danger I can see is if the other other owners can find a builder or engineer who is prepared to state that the work is necessary to maintain the property in the same condition, and can describe it as preventative maintenance. They would have to be pretty dodgy or stupid to support a fictitious claim through to the tribunal, but no doubt they could be out there.

Finally, don't take the word of some anonymous forum member, do a search and download a copy of your states strata act and read it. They are fairly similar across the country, easy to understand for non legals and your position is clearly stated. It will give you far more confidence when dealing with the BC than hearsay from us. Quoting the relevant sections will display that you are aware of your rights and perhaps clarify a few points that they themselves may not be aware of.

Cheers,
Beef.
 
don't take the word of some anonymous forum member, do a search and download a copy of your states strata act and read it. They are fairly similar across the country, easy to understand for non legals and your position is clearly stated. It will give you far more confidence when dealing with the BC than hearsay from us. Quoting the relevant sections will display that you are aware of your rights and perhaps clarify a few points that they themselves may not be aware of.

Excellent suggestion Beef.

Unfortunately, that puts the onus squarely back in the lap of the original poster to do some detailed reading and research.

Hopefully they take that leap and put in the hard yards that are required to get them up to speed with their issue.
 
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