Tax Structure Advice

[Paul Garcia]

Hi All,

After 30+ years of owning apartment buildings my dad finally but his properties into LLCs (sole owner/series LLCs)! He also set up a management company, he has always self-managed. The idea is for the individual properties is to hire the management company to manage and of course pay a fee. I know this is not an unusual structure but I'm trying to see if there is value here. My dad does not work anymore, like a 9-5, and the goal of this structure is to reduce his tax liability. Mind you he has owned them for a long time and the available deductions are running out. 

The problem I see is that the management fees charged will now be top line income for the management company. What kind of deductions are allowed for a management company? Could you run healthcare costs through there? Is income taken from the management company subject to FICA taxes? Trying to determine what is the best structure for the least amount of taxes.

Thanks!