Review Hospital Rental Arrangements for Tax Savings

Many rent arrangements have been established using triple net leases. This means the vet practice, not real estate owner, pays all the property taxes and operating expenses of maintaining the building. This will add 3.8% tax on the net rental income to the owners’ tax burden in 2013 for those making $200,000-plus (single); $250,000 (married, filing jointly). Owners may be able to avoid this by changing to a gross lease. Practice owners may be paying more rent than they need to and adding unnecessary tax burden to their yearly obligations.