By default, The Sims 2 allow you to built up to 5 levels. This means houses like basement + 3 floors + roof or terrace. You can eliminate the basement, or built an underground floor inside basement. There is a TRICK that allow building 6 levels: put a dormer on the highest level, but this will not allow anymore stepped roofs taller than one floor.
University Expansion Pack allows to change the floor limit: press Ctrl+Shift+C when you are in Neighborhood (NOT in a lot), type sethighestallowedlevel 16 (or any number up to 255), then open any lot and you can built more levels. If the height limit was reached, just put a dormer to unlock the limit.