Don't over-pay real estate taxes!

     In general, real estate taxes are the landlord’s legal responsibility; you become liable only for the taxes you specifically agree to pay. Like the operating expense clause, however, a real estate tax clause can be used as a catchall to cover additional charges.

     Limit your obligation to real estate taxes or taxes a community may impose instead of real estate taxes. Your lease should protect you from paying a landlord’s income taxes, corporate taxes, taxes on rents and gross receipts, inheritance taxes, capital gains taxes, and payroll taxes. Be careful about language that tries to make you responsible for undefined taxes that a government authority might impose some time. One tenant who failed to do this many years ago wound up paying its landlord’s income taxes after the Sixteenth Amendment initiated them.

     Check special assessments to see if they’re included with your real estate taxes: charges for new sidewalks, new sewer lines, and so on. Courts have told landlords repeatedly that special assessments aren’t real estate taxes. If you’re paying assessments as part of your tax bill, you’re giving your landlord more than it bargained for.

     In some situations, the landlord will contest high taxes in order to enhance the property’s value. Make sure your lease entitles you to the benefit of any tax reduction your landlord or other tenants may gain after they’ve recouped their expenses.