Triple-Net Lease (NNN)
A lease where the tenant pays taxes, insurance, and maintenance — popular as passive 1031 replacement property.
Definition
In a triple-net (NNN) lease the tenant is responsible for the three "nets" — property taxes, insurance, and maintenance — on top of rent, leaving the owner with a relatively hands-off, predictable income stream. NNN properties (think a single-tenant pharmacy or fast-food building on a long corporate lease) are common replacement properties for 1031 investors who want to defer tax and step down from active management.
Why it matters
NNN assets are a classic "trade up to passive" 1031 target: stable income, minimal landlord duties. The risks concentrate in the single tenant’s credit and the lease term, so those are what to diligence.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.