Creating Your Own PM Company

[Josiah Cooper]

Hello BP Community!

I wanted to get some opinions on creating a property management company for our rental properties. I have heard of people owning properties and then creating a PM company that "manages" their properties. I guess the question that I have is what are the pro's in doing that? The only thing I can come up with is that because your income properties are paying for a "PM" company, the NI will be lowered for tax purposes at the end of the year? We, like everybody else, are always trying to come up with ways to pay lower taxes and thought this might be an option. If anybody else has any insight into why this would be a good idea it would be greatly appreciated.

Thanks again.

[Brandon Hall]

@james

To expand on what @Linda Weygant said about the home office deduction no longer being an audit flag, the IRS now allows a "simplified" method where you simply multiply the square footage of the office by $5 and that's your deduction.

One has to think that if the IRS is offering and encouraging a simplified method of reporting, it's not going to be the cause of an audit.