Collecting CapEx spent vs Depreciating
I'm completing the 2019 CAM rec for an office building and I see on most leases that the property can bill back capital expenditures to tenants over a total of 144 months.  I see from last year's income taxes on the property that annual CapEx is being added to the Building asset account for depreciation purposes.  If it is being depreciated, then I don't think I can also bill back the CapEx to the tenants.  Wouldn't that be *double-dipping?*
[{"id": "fxwkyei", "text": "This would be a landlords wet dream!Funding renovations that depreciate by 12 years without any loan or other form of fund raising!My accounting principles state that the assets from the CapEx are being loaded on the balance sheet (use of funds) but my commercial principals have taken the source of funds as Cash generated from Operations(Non rental Income).Pardon my rudimentary understanding, seems legit.", "replies": [{"id": "fxx98ni", "text": "I agree. They\u2019re two different things:  tax purposes and expense recovery.", "replies": [{"id": "fy4bs7t", "text": "Very succintly put!Great!", "replies": [], "depth": 3}], "depth": 2}, {"id": "fxzct3n", "text": "CapEx is basically being funded out of net operating income which is sufficient to cover them.  We just got the property recently and I see that though passing on the common area capex (no TIs or LLs) is allowed on the majority of the leases, this was not done previously and I thought that was the reason why.  If I start doing it now, there will be a lot of upset tenants and just telling them to look at the lease they signed rarely calms people down.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fxxilps", "text": "What/how you are charging the Lessee's for property maintenance is a function of your lease agreement and doesn't necessarily align with the corporate tax accounting rules.  Also, without knowing the details of the CAM scope of work its not possible to know whether it was proper to depreciate vs. take as a current year expense - the latter being the obvious preference.", "replies": [{"id": "fxzd4bc", "text": "Most of the leases say common area capex with a useful life less than 5 years can be included in the CAM pool for the current year.  Over 5 years would be captured 100% over 144 months.  This is for an office building and I'm more familiar with CAMs on retail buildings/shopping centers where I haven't come across capex recapture.", "replies": [{"id": "fy29znl", "text": "What Common Area Capex expenses are you referring to?  Items done in the past and not recaptured or are you planning to get the tenants to fund a wish list of improvements?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fy4sncp", "text": "I rarely see CapEx being passed through in office..most tenants would say hell no. Retail is a different story because making the center better is actually better for their business. Even then there are still exclusions.\n\nYou may be able to pass through minor CapEx but nothing that you will amortize", "replies": [{"id": "fylnaip", "text": "That has always been my experience as well.", "replies": [], "depth": 2}], "depth": 1}]