Heating, ventilation, and air conditioning system upkeep - filter changes, seasonal servicing, repairs - included in CAM as an operating expense. HVAC system replacement is a capital expenditure.
Routine HVAC maintenance (filters, belts, refrigerant, service contracts) is an operating expense properly included in CAM. HVAC system replacement or major component upgrades (compressor replacement, coil replacement, complete system overhaul) should be treated as capital expenditures and amortized.
A landlord replaced three rooftop HVAC units ($225,000 total) and called the costs 'emergency HVAC repairs' on the reconciliation statement. No amortization was applied. Tenants received the full cost in a single year.
Request the HVAC maintenance contract and any invoices for individual service events over $5,000. Any "replacement," "installation of new," or "complete system" language indicates a capital expenditure.
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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.
