© 2021 MJH Life Sciences™ and DVM 360. All rights reserved.
I own the buildinghow much rent do I pay myself?
Gary I. Glassman, CPA
Gary I. Glassman, CPA, is a member of the Veterinary Economics Editorial Advisory Board who has worked exclusively with veterinarians for more than 20 years. He specializes in accounting, tax planning, and practice transitions and is a partner with Burzenski and Co. P.C. in East Haven, Conn.
When you're the veterinary practice owner and the landlord.
It isn't uncommon for a veterinary practice owner to own the hospital building-in which case, said party pays rent to her or himself. But how much? Fetch dvm360 conference speaker Gary Glassman, CPA, has a standard formula to determine what's fair, although it might not be what you think.
"Many people look at their rent cost [as] a percentage of the gross revenue of the practice, but that's truly not the right way to set the rent," Glassman says.
More lease topics
Footing the bill when adding on to a leased veterinary practice.
Check the fine print when signing a building lease.
Checklist to evaluate lease terms.
Instead, Glassman points to a "triple net lease" scenario wherein the tenant pays for utilities, insurance and property taxes. In such an arrangement, the landlord aims for a 10 percent return on investment, "based on the fair market value of the property."
Here's his example: "If my practice building was worth $1 million, then at 10 percent I would basically pay $100,000 in rent per year, divided by 12 and that would become my monthly payment," he says.
Monthly payment to yourself. Enjoy.
Watch this video for more.
You. Can. Do. This!
At Fetch dvm360 conference, we're the support system you need. With every conference this year, we intend to nurture your mind (meaning quality CE for days) while also encouraging you to take stock of your physical and emotional health. Register now.
Related Content:
