Tax on property management services?

[Nathan Mauzy]

I have three rental properties in the Houston area. My family and I recently relocated to Arizona and so we reached out to a friend who has a handyman business to ask him to property manage for us. He is asking questions about goods and service tax add ons to the monthly fees. Can anyone let me know if you pay additional fees for tax on top of the monthly service fees? We agreed to a $100/property fee so he is asking about charging another $25-30 on top of that for taxes. Thanks for any advice. Nathan

[Andrew S.]

Not sure what taxes he wants to be compensated for here.  Sounds like he wants you to cover his income tax?  That's not done "normally", but if you feel that is appropriate and agree to it, then there is nothing wrong with it.  $100 per property could be a good deal or  bad deal - typically PMs take a percentage of rent, so if these are very high rent properties, then $100 is cheap.  If they are $500/month properties, then its expensive.

Have you verified that that Texas law allows him to PM?  Most states require PMs to have a real estate license, so if that's the case in Texas, then make sure he has that license.