Do corporations pay real estate taxes on leased property?

Answer 1

There are NNN or tripple net leases explained below:

A triple net lease, sometimes called a net-net-net or an NNN, is an agreement where the lessee agrees to pay a net rent and a series of other fees for the right to use a piece of real estate for an extended period of time. In addition to a monthly rental fee, the lessee agrees to pay all taxes, insurance, and costs associated with repairs, replacements and maintenance of the property.

Many large national retail chains participate in triple net lease agreements in order to avoid making large capital investments. These companies prefer to keep funds liquid for other investments. A triple net lease is attractive to many real estate investors and developers. One reason is the sharing of financial responsibility. Once the initial capital is invested, owners can reap the benefits of rental fees and the lack of maintenance fees, while still reaping tax benefits that come with ownership.

Answer 2

Whether the tenant is a corporation or not, everybody pays for all expenses. It depends on how you structure the lease and who takes the risk. So let me explain.There are two basic leases and a few other variations but let's just limit our discussion to Gross Lease and Net Leases.

A gross lease is a lease that charges the tenant a flat amount of rent monthly. The landlord calculates and add up all his expenses including mortgage, utilities, landscaping, janitorial, management and etc and hopefully his profit and quotes the tenant a fixed rental rate plus sales tax, .

A Net lease is usually derived at when the landlord charges the tenant a flat rental rate plus a separate charge for all the operating expenses necessary to run the property. This will include all the above mentioned expenses. The tenant is charged an estimated amount of operation expense call CAM. At the end of the year, they will tally up to see whether the tenant needs to pay more or the landlord needs to reimburse the tenant for any overcharge.

So what is the difference? For a Net lease, the expenses are direct pass through and the tenants take the risk of runaway expenses such as recent insurance premiums and real estate taxes. They can limit that risk by putting a cap on the controllable items. Gross lease on the other hand exposes the landlord to risks and he can take it on the chin if expenses go south on him.

Answer 3

It generally does not matter the type of entity (corporation, LLC, and individual, etc) involved. The important thing is who the responsible party is under the terms of the lease. Some leases are called tripple net leases (NNN) and operating expenses (including property taxes) are usually passed on to the tenant whether the tenant is a corp or a person.

Answer 4

You pay tax on what you own. So, I wouldn't think that a corp would pay tax on leased property. The entity that is leasing it would be the owner and would be responsible for that.

Answer 5

The owner usually pays all taxes and expenses but there are contracts that require the renter to pay everything.

Answer 6

Indirectly. The tax bill goes to the owner, but the corp. has to pay the rent, which pays the taxes.

Answer 7

yes.