New York City Office-Sharing Agreements and Commercial Rent Tax

The following article, New York City office-sharing agreements and commercial rent tax, originally appeared in the May 2024 issue of The Tax Adviser.

On September 20, 2022, New York City’s Department of Finance issued Finance Letter Ruling (FLR) 22-5018, which highlighted that businesses engaging in office-sharing agreements may be subject to the city’s commercial rent tax (CRT). The CRT is a tax imposed on commercial tenants in Manhattan that pay annual rent of at least $250,000.

Although FLR 22-5018 focused on whether a taxpayer could claim a subtenant deduction, it has ramifications for unsuspecting businesses engaged in office-sharing activities that may be subject to New York City’s CRT. As Ted Tourian discusses in the full article, a business does not necessarily have to have exclusive control of premises to be subject to the CRT. Further, the concept of rent may be fluid in office-sharing arrangements because it is sometimes unclear what services provided under them pertain to building services rather than business services.

Read the article