A table or document showing how the cost of a capital asset is allocated as an expense over its useful life. In CAM, depreciation schedules determine the annual amount of amortized capital expenditures that landlords can pass through to tenants.
A depreciation schedule lists each capitalized asset, its original cost, placed-in-service date, useful life, depreciation method (straight-line or accelerated), and cumulative depreciation taken. For CAM purposes, when a lease permits pass-through of amortized capital costs, the depreciation schedule determines the annual charge. Straight-line depreciation is most common for CAM: the asset cost is divided equally over the useful life. Some leases also allow the landlord to add a reasonable interest component to the annual amortized amount.
A landlord replaced an HVAC rooftop unit costing $120,000 and amortized it over 5 years ($24,000 per year through CAM). The industry standard useful life for a commercial rooftop unit is 15 to 20 years. By using an unreasonably short depreciation period, the landlord tripled the annual charge passed through to tenants.
When capital expenditures are amortized through CAM, request the depreciation schedule. Verify that the useful life assigned to each asset is reasonable. HVAC units should be 15 to 20 years, roofs 20 to 30 years, and parking lot resurfacing 10 to 15 years. Unreasonably short useful lives inflate your annual share.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
