BDSA QUANTITY SURVEYORS

Sinking Fund

Sinking Funds

What is a Sinking Fund?

A sinking fund is a reserve of money, set aside for strata schemes, to pay for future repairs and maintenance of common property items.

The sinking fund budget estimates the amount of expenditure for the financial year and anticipated expenditure over subsequent years.

Legislative requirements of sinking funds are, generally, for the provision of ten year expenditure forecasts.

Money paid into the sinking fund is raised from a levy paid by the strata unit owners.

The body corporate estimates the levy amount based on apportionment of the sinking fund budget relative to unit entitlements of each lot.

The actual levy amount is decided at the annual general meeting of the committee for the body corporate.

Other money paid into the sinking fund may include interest from investment of sinking fund monies, monies received under insurance policies for destruction of items of a major capital nature.

Why have a Sinking Fund?

Most maintenance and repair expenses accrue over time.
Using a sinking fund forecast report to set the sinking fund levies ensures each owner pays a fair share of the costs attributable to their usage of the building and reduces the risk of special levies being required.

BDSA Feasibility and Project Costing

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