Can I pay myself as a property manager?

4 Replies

I have been managing my own rental properties for last five years and I have a full time job besides my rentals so I have never paid myself any management fee. I heard some of investors suggested I should pay myself 10% of the management fee since I'm doing everything. What are the recommendations on this topic? What are those pros & cons for doing that? I really appreciate your feedbacks! 

There's no point in paying yourself.  It would be a deduction from the rental but then you would have to report the income, so its a wash for taxes.  If you mean, "can I take some of the accumulated cash from my rentals and use it for myself", then sure.  Its your money.

@Linda Higgins  There are times you might want to do this.  I was not in Social Security due to being in full time ministry, therefore would not qualify for Medicare at retirement.  When I left my position I began taking 5% management fee to finish my 40 quarters to qualify.  It also shows a reasonable management fee as an expense line on my books when I go to sell. 

Otherwise you simply may want to take an equity draw which is a non-taxable event (check with your cpa). 

I was not sure I should take some extra income now but pay the tax or just simply leave it for the future investment. Thank you for getting back to me tho.

Whether you take any money from the accounts you use for rental properties or not doesn't affect taxes.  The income from your rentals is always taxable.

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