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A
arkvalleyinfo
October 16, 2018
Question

How do I enter tenant improvement expenses that will be reimbursed by the landlord?

  • October 16, 2018
  • 2 replies
  • 0 views

I negotiated a $25,000 tenant improvement from my landlord. I have to pay for this and then will be reimbursed when the work is completed and I move in. How do I record these expenses and then the reimbursement? 

2 replies

john-pero
john-pero
October 16, 2018

You can expense it almost the same way the landlord will, as a capital asset improvement. But i would book it as repairs since you wnill need to track it to issue 1099s to your contra ctors and vendors anfd you will be receiving one from the landlord.

Plan ahead any contractors you can pay by credit card or paypal do not get a 1099 from you

    M
    Milwaukean
    July 3, 2024

    With regard to the TI funds, I have the same scenario where we paid all the upfront costs for the renovation and the landlord will be reimbursing an agreed upon amount.  I charged all my expenses for the renovation to an expense account I named 'Store Buildout', so where do I record the landlord payment once I receive it to offset the expenses and not show it as income? I considered just showing it as a credit to the same expense account, but feel that is not the best way to approach.

    TIA.

    A
    Anonymous
    October 16, 2018

    If its an improvement to the landlords building that the landlord is paying for it, then Im not sure that is your asset at all - I think its the landlords asset.  If the landlord is paying for the work, then you probably pay the landlord rent during that period.

    If so then I think all the expenses would simply be backcharged to the owner ultimately resulting in zero net to the business.

    It would be a different situation if the landlord waived some rent and you paid for the work - then it would be a TI asset to the tenant.

      A
      Anonymus2
      May 29, 2022

      In either case of TI received directly or waived in rent, Money came came in for to offset the improvement cost. It'd go to assets (to be reduced) as technically your landlord aid for that assets and not you/your business (for the amount of TI). i.e. (If Leasehold improvements are $100,000 and $2000 TI then your Leasehold improvement assets are $98,000. Hope this helps!

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