Flat Chat Forum Common Property Current Page

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  • #51939
    Avatarnixjet
    Flatchatter

    Does anyone have any experience with generating income for a BC from advertising billboards erected on CP? I’m an owner in a building in the eastern suburbs in Sydney that has a very large blank wall that that faces a busy arterial feeder and I am thinking it may be attractive as a site to mount tasteful advertising sign/s, bring income to the BC and reduce our levies.

    Has anyone here done something similar or in a building that generates income?

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  • #52012
    Jimmy-TJimmy-T
    Keymaster

    Yes, I know – the building in kings cross that hosts a huge sign from a well known soft drink bottler would have to be drawing a substantial income from that.

    The chances are the building in Kings Cross – which was an hotel and a shopping centre before it was an apartment block – is getting zilch from that site which would have been sold separately.

    Same applies to  the Avis block just down the hill where the signage rights were pre-sold by the developer. Also the signage rights on the Eastern end of the Altair building which were attached to a small apartment in the building.

    The block was saved from having a commercial carbuncle on its Eastern face by the pre-Olympic planning ban on new billboards in exposed locations. The apartment owner, connected to the original developer, relinquished the signage rights to the owners corp as they were worthless.

    #51994
    Avatarnixjet
    Flatchatter
    Chat-starter

    That’s handy information.  My feeling is we’d fall into the third category.

    also, the sort of options I’d proposed to the OC would be cost neutral to set up.

    #51993
    Avatarnixjet
    Flatchatter
    Chat-starter

    Yes, I know – the building in kings cross that hosts a huge sign from a well known soft drink bottler would have to be drawing a substantial income from that.

    yes, lowering levies is my main objective.

    #51988
    Jimmy-TJimmy-T
    Keymaster

    My understanding from reading a few years ago is that you need to look at a tax ruling on strata income. It is readily available but I don’t have it at my fingertips.

    Here it is. The irony is that you can be assessed for tax on the your share of the income from letting common property but you are unlikely to ever see the money, except via reduced levies.

    But many strata schemes rent their roof space to telecoms companies and just pay any taxable amounts as if they were compnay.

    The biggest obstacle to this plan would be if your local council decided it would rather not have advertising on the side of your block.

    #51947
    Sir HumphreySir Humphrey
    Strataguru

    I don’t claim to be fully up to date on this. My understanding from reading a few years ago is that you need to look at a tax ruling on strata income. It is readily available but I don’t have it at my fingertips.

    Some sorts of income is taxed at the level of the OC, which pays at the company tax rate. Levy income is not taxed because the levy is money paid by the owners to the owners corporation in proportion to unit entitlements and the sum of the owners in proportion to unit entitlements is identical with the composition of the owners corporation ie. this is our money that we are paying to ourselves.

    However, a third class of income is taxed at the level of the individual owners. I suspect that renting out common property wall space for a billboard would be in that category. For that income, the OC would have to tell the individual owners what their share by unit entitlements is out of the total income and then the individuals should declare their portion on their individual tax returns. Consequently, a unit owner paying a low marginal tax rate might benefit more than a person on a higher marginal tax rate. Since there would probably be little or no costs involved to the OC, the differential benefits might not matter – everybody gets something, which is better than nothing and it costs you nothing. If the income-earning thing required a substantial investment out of OC funds first, then differential benefits, not in proportion to unit entitlements, might be a problem.

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