DEFINITION of 'Rent Expense'

The cost incurred by a business to utilize property. Business can take rent expenses as a tax deduction, provided that the property is used for business purposes, the cost is reasonable, and no equity or ownership in the property is accumulated from the rental payments. Property taxes paid on rental property can also be deducted as rent expenses.

BREAKING DOWN 'Rent Expense'

Rent paid in advance can only be deducted during the period to which it applies, so if a business paid all of its rent for 2010 and 2011 in 2010, it would only be able to deduct the 2010 portion of the rent in 2010, and would have to wait until 2011 to deduct the 2011 portion.



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