A common lease benefit is to negotiate for “free” leasehold improvements as part of the lease package, which the landlord then charges back to the company through monthly lease invoices. The problem is that local governments usually calculate property taxes based on the income stream of a property. Since lease payments have increased to cover the cost of the leasehold improvements and the landlord may have funded the improvements with debt (which taxing authorities do not always include in the income stream calculation), the net result is that property taxes can increase as a result of “free” leasehold improvements.
To avoid this scenario, consider negotiating for rent payments that include no leasehold improvements, and instead pay for the improvements directly.