What is the typical threshold between a repair and a capital improvement?

The IRS uses a $2,500 per item threshold for capitalization, but commercial leases typically define capital improvements as costs that extend the useful life of a building component or result in a new asset, regardless of dollar amount. Some leases explicitly define a threshold (e.g., any single expenditure over $10,000 must be amortized). Your lease definition controls.

Can landlords amortize capital costs through CAM?

Some leases permit amortization of capital improvements over the useful life of the asset, with tenants paying their pro-rata share of the annual amortization. This is different from expensing the full cost in the year it was incurred. If your lease permits amortization, CAMAudit checks that the landlord is amortizing rather than expensing large capital items.

How do I prove that a maintenance charge was actually a capital expenditure?

Request the invoices, contracts, and scope of work for any flagged line item. Capital work typically has a project contract, a completion certificate, and permits for larger projects. Routine maintenance is invoiced by service providers with work orders. The documentation trail usually makes the distinction clear.

Are tenant improvement costs for other tenants ever included in CAM?

They should not be, but this is a documented fraud pattern. Tenant improvement allowances and build-out costs benefit specific tenants and are not common area expenses. Some landlords include these costs in "building improvements" or "suite renovations" line items and pass them through the CAM pool. CAMAudit flags charges that match this pattern.

Classification Rule

Common Area Misclassification: How CAMAudit Detects This Overcharge

A roof replacement billed as "roof maintenance," a parking lot repaving classified as "common area repairs," or a new HVAC unit listed as "HVAC service" all shift capital costs your landlord should absorb onto your monthly CAM bill. Capital costs misclassified as maintenance can add $20,000 or more to a single reconciliation.

How CAMAudit Detects This

CAMAudit uses AI-powered classification to evaluate each line item in your CAM reconciliation for signals of capital expenditure disguised as operating expense. It looks for patterns associated with capital work: large one-time charges, system replacements, new installations, multi-year useful life assets, and work scope descriptions inconsistent with routine maintenance.

The tool also checks for leasing-related costs that sometimes appear in CAM: commissions, build-out costs, space planning fees, and tenant improvement work. These are categorically ineligible for CAM pass-through regardless of how they are labeled.

When a line item is flagged, CAMAudit notes the specific signals that triggered the flag (large amount, replacement language, capital asset description) so you can request the backup invoice and verify the nature of the work.

Real-World Example

A CAM reconciliation included $38,000 in "parking lot maintenance," $12,500 in "HVAC maintenance and upgrades," and $9,200 in "lobby improvements." CAMAudit flagged all three: the parking lot work was a full resurfacing (capital), the HVAC line included two new rooftop unit installations beyond routine service, and the lobby line referenced new flooring installation. Total potential capital expense in CAM: $59,700.

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Common Area Misclassification: How CAMAudit Detects This Overcharge

How CAMAudit Detects This

Real-World Example

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Upload your lease. CAMAudit runs 13 detection rules in under 5 minutes.

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Frequently asked questions

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Find overcharges in your CAM reconciliation. Most audits complete in under 5 minutes.

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