Landlord Tax Tips: Hiring Family Members is a Win-Win

Crucial Tax Tips For Landlords

Tip #12, Hire Family for Labor

You should hire someone (like a family member) to do your work and write off the cost of labor, because you cannot deduct the cost of your own labor.

For example, if you paint your rental property or install a lock using your own labor instead of hiring a painter or a locksmith, you cannot deduct any expenses for labor.

However, if you hire a non-owner like your child or possibly your spouse, the costs are deductible against your income because they are considered to be rental expenses.

There’s no catch and it’s A-OK with the IRS. You will have more control over lowering your expenses while still keeping the ability to write them off. Be sure to check out this article if you want to find out more.

Tip #13, Pay Your Kids in an IRA

Pay your kids to do work on your properties and put the money in IRA accounts for them.

This is especially a good idea if you’ve already maxed out on your and your spouse’s IRA contribution for the year.

So if you’re at a high tax bracket the end of the year, hire your kids to landscape your rentals. 

You’re better off avoiding the taxes on your extra income, and the money will be safe in a tax free shelter. It’s a good way to help your kid prepare for their first property purchase.  

Everyone’s tax situation is different, and this information should not substitute professional advice. Taxpayers should always consult with their tax advisors to consider specific factors that might affect their situation.

For more Tax Tips and FREE Property Management Software for real estate investors, check out TReXGlobal.com.

Did you miss these tax tips?

Home Office Deduction
Use Depreciation to Lower Income
Spread Out Repairs
Utilities That Landlord Pays
Auto Expenses You Can Actually Deduct
Look For Properties While On Vacation
Calculating Gain on Sale of Rental Property
New Property Management Software Makes Tax Prep a Breeze
Sell Property To Yourself
Deduct Losses Even If No Expenses
Make Personal Interest Deductible

American Apartment Owners Association offers discounts on products and services for landlords  related to your real estate investment including REAL ESTATE FORMS, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.

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Tags: tax+tips, tax+preparation+software, free+property+management+software, real+estate+forms, tenant+background+checks, landlords, landlord+tax+issues

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This entry was posted on Thursday, February 12th, 2009 at 9:17 am and is filed under AAOA Forum. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. AAOA - American Apartment Owners Association » Crucial Tax Tips for Landlords, #14 said at March 5th, 2009 at 2:12 pm

   [...] Home Office DeductionUse Depreciation to Lower IncomeSpread Out RepairsUtilities That Landlord PaysAuto Expenses You Can Actually DeductLook For Properties While On VacationCalculating Gain on Sale of Rental PropertyNew Property Management Software Makes Tax Prep a BreezeSell Property To YourselfDeduct Losses Even If No ExpensesMake Personal Interest DeductibleHiring Family Members is a Win-Win [...]

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