A single net lease is a commercial lease in which the tenant pays base rent plus one additional cost — property taxes — while the landlord continues to cover insurance, maintenance, and structural repairs.1Legal Information Institute. Net Lease It sits between a gross lease, where the landlord pays everything, and the double or triple net structures that push more costs onto tenants. The “single” in the name is literal: exactly one operating expense category shifts, and in practice that category is always the property tax bill.
Where It Fits Among Commercial Lease Types
Commercial leases exist on a spectrum. As more operating expenses shift to the tenant, the base rent drops, but total occupancy cost usually climbs.
- Gross lease: the landlord pays all operating expenses. Base rent is the highest of any structure.
- Single net (N): the tenant pays base rent plus property taxes. The landlord still handles insurance, common area maintenance, and structural repairs.1Legal Information Institute. Net Lease
- Double net (NN): the tenant pays base rent plus taxes and building insurance. Maintenance stays with the landlord.
- Triple net (NNN): the tenant pays base rent plus taxes, insurance, and common area maintenance. The landlord’s ongoing role is minimal.
A single net lease is the lightest version of a net lease a tenant can agree to. You take on one predictable cost category and leave the volatile ones — insurance premiums, roof replacements, parking lot resurfacing — with the owner.
How the Property Tax Payment Works
Property taxes are set by the local assessor, who assigns a value to the parcel and applies the jurisdiction’s rate. Under a single net lease, the tenant is on the hook for that bill.
The lease will spell out one of two payment methods. The tenant either pays the taxing authority directly after receiving a copy of the assessment, or the landlord pays first and invoices the tenant for reimbursement. Either way, the lease usually sets a hard deadline. Late payments can trigger penalties and interest set by the jurisdiction, commonly landing in the range of 6% to 18% annually on the overdue balance.
Single-Tenant Versus Multi-Tenant Buildings
When one tenant occupies the whole building, they pay the full tax bill tied to the parcel. In multi-tenant buildings, the tax is prorated, typically by each tenant’s share of leasable square footage. A tenant occupying 4,000 of 20,000 square feet owes 20% of the annual tax.
If you lease space in a multi-tenant building, ask to see the actual tax bill rather than accepting the landlord’s calculation on faith. The assessor’s office can confirm the total, and a well-drafted lease will give you the right to audit the landlord’s records.
Who Can Challenge the Assessment
Since you are writing the check, an inflated assessment costs you directly. Whether you can file an appeal depends on the lease and on local law. Some jurisdictions treat net lease tenants as parties whose property is assessed and let them pursue administrative and judicial appeals; others limit standing to the property owner. The safest move is to negotiate explicit appeal rights into the lease so the question never arises.
What the Landlord Still Pays
The word “single” carries weight. Because only property taxes transfer, the landlord keeps every other operating cost:
- Building insurance, including property coverage and general liability for the premises.
- Common area maintenance: parking lot upkeep, landscaping, exterior lighting, snow removal, and shared-space cleaning.
- Structural repairs to the roof, foundation, exterior walls, and building systems such as HVAC and plumbing.
- Utilities for exterior and shared spaces, depending on how the building is metered.
This is what makes the single net lease relatively tenant-friendly. A tenant pays a slightly higher base rent than they would under a double or triple net structure and gets insulation from the operating costs that are hardest to predict.
Federal Income Tax Treatment
The pass-through creates a reporting obligation that catches some landlords off guard. When a tenant pays property taxes on the landlord’s behalf, the IRS treats that payment as rental income to the landlord. The amount belongs in gross income even though the money never touches the landlord’s bank account.2Internal Revenue Service. Tips on Rental Real Estate Income, Deductions and Recordkeeping Rents are explicitly listed as gross income under federal tax law.3Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined
The offset is that the same tax amount is deductible as a rental expense, so the inclusion and deduction typically cancel out. Skipping the reporting entirely, though, can still generate an IRS notice.4Internal Revenue Service. Publication 527 (2025), Residential Rental Property
For the tenant, the property tax payment is a business expense. A tenant using the property for a trade or business can deduct the payment as an ordinary operating cost. The landlord does not lose the deduction by passing the cost through; the IRS views the arrangement as the tenant paying rent (deductible to the tenant) and the landlord paying the tax (deductible to the landlord).
What Happens If the Tenant Doesn’t Pay
This is where the structure creates real exposure for landlords. The lease may assign the tax obligation to the tenant, but the taxing authority is not a party to the lease. Property tax liens attach to the property itself, so if the tenant stops paying, the government looks to the owner.
These liens carry what the IRS describes as “superpriority.” They jump ahead of mortgages, federal tax liens, and nearly every other claim against the property.5Internal Revenue Service. 5.17.2 Federal Tax Liens Left unpaid long enough, the local government can sell the property at a tax sale, with timelines that generally run one to four years of delinquency before a sale.
Most single net leases address this with a self-help clause. The landlord can pay the overdue taxes and charge the amount back to the tenant as additional rent. Some leases treat a missed tax payment as an event of default that can end the lease. A tenant who misses a property tax deadline is not just risking a late fee. The whole occupancy can be at stake.
Terms Worth Negotiating
The single net lease is the simplest of the net structures, but a few provisions materially affect what each side owes.
Tax Caps and Base Year Stops
Tenants can negotiate a cap on annual property tax increases, often written as a base year stop. Year one sets the baseline, and the tenant’s obligation rises only up to a set percentage each year. This matters most when the building changes hands, since a sale can trigger a reassessment and a sudden jump in the bill.
Audit Rights
In multi-tenant buildings, tenants should insist on the right to inspect the actual tax bills and the square footage figures used to allocate them. Errors in proration happen more often than tenants expect, and without audit rights there is no practical way to catch them.
Appeal Rights
If you pay the tax, you should be able to challenge the assessment. Standing is not automatic in every jurisdiction, so the lease has to address it directly. Either the tenant gets the authority to file an appeal, or the landlord agrees to file at the tenant’s request and expense.
Proof of Payment
When the tenant pays the taxing authority directly, the landlord needs confirmation the payment actually happened. Require proof of payment within a set number of days. When the landlord pays and invoices the tenant, the lease should specify the reimbursement deadline and require a copy of the tax bill with the invoice.
Where Single Net Leases Still Appear
Single net leases are uncommon in today’s commercial market. The industry has moved toward triple net structures, especially for industrial, retail, and office properties. Most investors want to push as many operating costs as possible to the tenant, and most institutional tenants can handle the administrative load.
Where the single net lease still turns up, it tends to be in older retail properties or smaller industrial buildings where the landlord wants to keep tight control of insurance and physical condition. A landlord planning to sell in a few years may prefer to keep those items in-house so the building stays marketable, and offloading only the property tax gets rid of the most volatile annual expense without surrendering everything else. Smaller tenants often prefer it for the same reason in reverse: one added cost to track, and property taxes are at least predictable in their timing even when the amount moves.