The common-area deduction formula
Common share = bill × common ratio. Tenants’ pool = bill − common share. The ratio comes from meter readings (master − submeters) ÷ master, from square footage common ÷ (common + rentable), or from a percentage you set.
Worked example: master meter with submeters
Fictional numbers: a $300.00 water bill. The master meter read 12,000 gallons for the period, and the four units’ submeters add up to 10,500 gallons.
| Step | Calculation | Result |
|---|---|---|
| Common use | 12,000 − 10,500 | 1,500 gallons |
| Common ratio | 1,500 ÷ 12,000 | 12.5% |
| Owner keeps | $300.00 × 12.5% | $37.50 |
| Tenants’ pool | $300.00 − $37.50 | $262.50 |
| Equal split, 4 units | $262.50 ÷ 4 | $65.62 or $65.63 each |
Worked example: square footage
Fictional numbers: a $600.00 gas bill heats 5,400 sq ft of units and 600 sq ft of hallways and lobby. The common ratio is 600 ÷ 6,000 = 10%, so the owner keeps $60.00 and $540.00 is split between the units.
Not sure whether to bill back at all? Estimate the yearly amount with the utility bill-back estimator, and read RUBS vs submetering for how the two approaches differ.
Questions
What is a common-area deduction?
It is the part of a master utility bill that serves the building rather than any one unit: hallway and exterior lights, irrigation, a pool, an owner-run laundry room or an office. The owner takes that part off the bill first, and only the rest is split between tenants.
Which method should I use?
Use meter readings when you have a master meter and submeters on the units, since the difference is the common use. Use a fixed dollar amount when you know a line item, such as an irrigation meter. Square footage suits heating or lighting that scales with space. A set percentage is the simplest when you have nothing better, so pick one you can explain to tenants.
What if the submeters add up to more than the master meter?
Then the readings do not match. Check that every reading covers the same dates, that the units are the same (gallons vs. cubic feet), and that no meter was misread. The calculator will not produce a negative common share.
What happens after the deduction?
Split what is left between the units with your lease’s method. The calculator shows an equal split as a preview; use the RUBS calculator for square footage, occupants, bedrooms or a hybrid.
Is this legal advice?
No. It does the arithmetic only. Rules on billing tenants for utilities, including how common areas must be handled, vary by state and city. Check your lease and local rules before you bill.