Tax Treatment Of Lease Terms Part 1: Lease Inducement Payments

The relationship between commercial landlord and tenant is often fraught with complications which often arise from a failure to understand the legal consequences of some formal or informal arrangement within the landlord-tenant relationship. To understand, avoid, and, at the very least, minimize these consequences, commercial tenants and landlords should avail themselves of the experience and knowledge of a qualified tax professional.

A common arrangement between landlords and tenants is a lease inducement payment, made by or on behalf of the landlord to entice a tenant to sign a lease agreement. Lease inducement payments may be:

  • cash;
  • moving expenses;