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Forums » Rental Property Questions & Landlording Issues » How do you handle work (management & labor) that you did yourself?

How do you handle work (management & labor) that you did yourself? Subscribe to How do you handle work (management & labor) that you did yourself?

8 posts by 6 users

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Ryan Stirling

Real Estate Investor · Pennsylvania


Forum_avatar_avatar-skellabudd

Icon_minipost Apr 05 '09, 03:21 PM

I'm interested to learn how people on these forums handle property management, labor, and any other expenses that you perform yourself.

Do you assign a value to your time and if so, is it market rate or do you use a discounted rate to increase the property's cashflow?

Do you pay yourself a salary/income or do you keep the money in the investment (in the bank account of the entity)?

Edited: 06/26/2010 at 07:50AM


K W

· Southern California, California


Forum_avatar_avatar-crowningtouch

Icon_minipost Apr 06 '09, 06:30 AM

I'm far from an expert, but i did just read about this type of thing in a Nolo legal book about Tax Deductions for landlords.

This may depend on how you hold tiile and do business. If you are an LLC, partnership, or Sole Proprietor, you can NOT legally deduct an expense based on the time you, as the owner, put into the rental.

I believe that if you are a corporation, such as an S corp, you can become an employee of the corporation and pay yourself, but then you have to pay income taxes on that as well.

Hope this helps.

Edited: 06/26/2010 at 07:51AM


Ryan Stirling

Real Estate Investor · Pennsylvania


Forum_avatar_avatar-skellabudd

Icon_minipost Apr 06 '09, 11:48 PM

K W,
Thanks for your response. I do understand there are a lot of ways to do this, but I was looking more for what individuals on this site "actually" do to learn if they think it's a great method or what the pros/cons of it. What do they use for their labor rates, etc.?

Edited: 06/26/2010 at 07:51AM


Joel K

Real Estate Investor · Bloomington, Indiana


Forum_avatar_avatar-rjkeefer

Icon_minipost Apr 07 '09, 01:03 AM

I'd like more info on this too...

Edited: 06/26/2010 at 07:51AM


J Scott

Real Estate Investor · Atlanta, Georgia


Forum_avatar_avatar-jasonscott
Donor

Icon_minipost Apr 07 '09, 04:57 AM

I don't hold rentals, so I'm definitely not an expert...

That said, the investors that I know maintain a separate legal entity (each of them uses an LLC, I believe) that provides property management services to their properties.

A % of the property income flows as a property expense to the PM entity as income in that entity.

Edited: 06/26/2010 at 07:51AM by J Scott


John Marriott

Real Estate Investor


Forum_avatar_avatar-johnski

Icon_minipost Apr 08 '09, 08:05 AM

I do not charge my rental properties for the time that I put in to them. I receive the benefits in increased cash flow. If I paid myself, I would have to take the wages as income, and pay taxes on them. Either way, from a tax perspective it works out the same.

Edited: 06/26/2010 at 07:52AM


Ryan Stirling

Real Estate Investor · Pennsylvania


Forum_avatar_avatar-skellabudd

Icon_minipost Apr 08 '09, 12:45 PM

@John

Did you count the work you do as an expense when calculating your taxable income?

Edited: 06/26/2010 at 07:52AM


Sanjiv Neal

Real Estate Investor · Indianapolis, Indiana


Forum_avatar_avatar-gforcenutrition

Icon_minipost Apr 11 '09, 10:00 AM

The work I put in rentals; I count as an expense towards taxable income. I figure the amount of what I would pay someone else to do the work.

Edited: 06/26/2010 at 07:54AM


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