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Updated over 13 years ago on . Most recent reply

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Jeff Thompson
  • San Diego, CA
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compensate work done by rentors by reduced the rent?

Jeff Thompson
  • San Diego, CA
Posted

Hi, I'm contemplating giving the renters an opportunity to work off part or all of their rent by helping manage the property. (who cares more about the property than those who live there?)

I figured we'd go month to month and adjust the rent per last months work. I'm wondering the legal implications of this idea?

Thanks,
Jeff

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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
Replied

You can get sideways in such an arrangement real quick. Say you have a problem and you evict, you show up in court and so does he.

Paying someone in rent is no different than cash in the eyes of the IRS. The total amount paid or received over the year is the number to look at, so you'd exceed the exemption quickly. Anything of value in exchange for work is income.

You may be required to provide withholding deposits as well, state and federal. Kaching!

You could be in violation of workmen's comp laws in your state if the judge thinks it was an employee relationship, that's another ding!

Now, it is customary to provide housing for a PM, but it is part of the pay and is contractual and it needs to be in compliance with taxes.

Evicting a PM is just as anyone else, fire them and boot them.

Actually, I'm in a similar delima as I have a property in need of repairs and it's out of town. I'd rent it for the repairs too, but that's really not a good option, I just need to have the repairs made by a contractor there and then deal with it. Good luck!

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