Say a business such as a retailer pays $100 a month in rent, and $5 a month to someone to cut the grass. It is likely that that on their
But what about situations involving triple-net leasing, where the landlord charges a base rent and then passes through other expenses such as CAM, insurance, and property taxes?
Say that same tenant get's a rent invoice from the landlord that lists the $100 base rent, and the $5 as additional rent for the passed- through expense (where tenant will pay the landlord $105, and then the landlord turns around and pays the lawn guy the $5). So now... how does the tenant in this second scenario list expenses? Does he deduct $105 in total rent expenses? Is there any line or forms for the tenant to distinguish between base rent and additional rent paid? ('Base rent' being an unchanging flat-rate rent for the space, and 'additional rent' being the changing amounts charged as expenses are passed-through to the tenant).
I've done some reading in the IRS instruction booklets, but cannot find a definitive, clear-cut directive on this. If in case you are leaning to say that the tenant in the second case will still deduct as in the first scenario, keep in mind that the landlord will be listing a $5 maintenance expense from HIS gross rents collected, and then the total of $10 maintenace deductions out there in the world give an inaccurate picture.
What do you think? Thanks.