Information for Renters

Tenants indirectly pay part or all of the property taxes through rent payments to a landlord; this is especially true in commercial and industrial lease situations. Before signing a lease, review it to determine whether the rent includes property taxes, or if the landlord will bill you for taxes in addition to rent.

The following definitions of lease types will help you determine if you are responsible for paying property taxes:

• Gross Lease: The property tax is included in the monthly rent payment.
• Net Lease: You will be expected to pay certain expenses besides the rent. Property taxes could be one of those. Check the lease for details, and discuss this issue with your landlord.
• Double- and Triple-Net Leases: These are variations of a net lease, in which you definitely pay property taxes on top of your rent. The landlord can tell you how much this will cost when you sign the lease. Tax changes can occur in later years during the lease term, and some tax changes occur retroactively -- for example, if a nonprofit tax exemption is granted for the property.

Discuss tax issues with your landlord regardless of the type of lease. Ensure that the lease clearly discusses your tax responsibilities before you sign.

Before committing to a commercial or industrial lease:

• Find out the property’s assessment, obtainable either through the Cook County Assessor’s Assessment Search or the prior’s year’s tax bill. If you are using a real estate agent's services, s/he should also be able to provide this information.
• Find out where the property is in the tax cycle. If the property will be reassessed during your lease, the new assessment might affect your tax payments .
• Learn how the landlord/owner will charge you for taxes. Will your share be based on a percentage that reflects your use of the property?
• Find out whether your tax responsibility will be affected if another tenant moves out/in to the space. Will you be expected to pay more, or will your tax responsibility be reduced?
• Affirm whether you, as the tenant, have the right to appeal the assessment.
• Find out what happens to your lease if the landlord does not pay the property taxes.
• Make sure the arrangements you make in regards to taxes are clearly spelled-out in the lease. See Chapter 7: Commercial and Industrial Leases for more information on leases.

TIP: Taxes can fluctuate from assessment cycle to assessment cycle. If you have a net lease, discuss with your landlord how these increases/decreases will affect your monthly payments. Make sure these points are outlined in your lease before you sign.