Texas – Taxability of Common Area Maintenance Charges

SALT Report 2348 – The Texas Comptroller issued guidance regarding the taxability of common area maintenance (CAM) charges that are collected from tenants by landlords in commercial leases. CAM charges are costs associated with the repair and maintenance of a common area and are usually found in triple net commercial leases. This type of lease is one in which the tenant agrees to pay property tax, insurance, and maintenance costs in addition to rent.

The Comptroller’s position is that CAM charges are incidental to lease contracts and should not be construed as the sale of taxable services. Because this determination conflicts with previous determinations, the Comptroller is currently amending the CAM rules to reflect that the lessor is the purchaser and consumer of the taxable services and is responsible for paying tax to the service provider.

For Further Information

Texas Comptroller of Public Accounts – Letter #201304670L


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