Tenants should clarify what taxes are included and how much taxes run. There are personal property taxes (on fixtures) and real property taxes - which are shared between the landlord and tenants. Sometimes landlords will agree to pay taxes during the base year and subsequently tenants pay increases in taxes, pay all of the tax, or split the taxes proportionally. Taxes can also be apportioned amongst the tenants in the building either based on rentable or rented space. Tenants should address what their fair pro rata share is in the event that another tenant does significant improvements to the property which may raise the tax bill. Landlords may not be able to change their formula on the payment of taxes if they are locked into a formula with other tenants in their leases.
Tenants should inquire in seeing the landlord’s property tax bill for the preceding year. The numbers may change when the building is reasssed or when the building is sold. Tenants should clarify whether responsibility for taxes is limited to property taxes or includes operating tax, payroll tax, licensing fees. Some jurisdictions will pass special assessments, for instance the City of Portland has assessed buildings within a certain distance of a streetcar or light rail line. Tenants can ask for caps on payment of tax, or limitation of any additional tax responsibility, or a fair formula to apportion taxes amongst tenants.
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