Tax approach for managing our own properties through an LLC

[Sergio Altomare]

Hi Everyone,

Being that I have pushed the limits on time to do my taxes this year through an accountant, and being that I have been doing my own taxes for a long time, I am making an attempt to handle them again this year with rental properties now part of my life. I need some help/advice to get started. I searched the forums a bit, but didn't find any discussions directly related to our situation.

First, thank you to everyone on here to help open the world of real estate investing to so many people! And special thanks to Josh and Brandon for all their work on building such a wealth of knowledge!

Ok, first, my fiancé and I, who have full time day jobs have acquired and actively manage 3 properties. 2 triplexes and 1 twin home. We bought a new home in December and are renting out the one we left. The tenants there did not move in until the middle of January, so that income will be for next year. My fiancé owns one of the tri's in her name and both of our names are on the other, which we purchased this past May. She started an LLC in 2012 to manage that property, but we have since started a new LLC for the other property.

Here's my question, and possibly the start of many. We've invested a lot of time and money in the properties and the business, but have yet to charge or apply PM fees to ourselves. Although I would argue that we spend as much time on this business as our day jobs, my main goal is to minimize the taxes paid on the supposed income that we haven't yet realized. The repair fees that we've made will most likely exceed the income, but what is the best approach to maximize deductions and minimize taxes? I am thinking that we can either funnel more money through the LLC in the form of management fees and use the property management company expenses to offset it, or should we expect the repair and depreciation expenses to offset the rental income? Keep in mind that we are the owners and also the PM company.

Hopefully this makes sense.

Thanks for any help offered!

Sergio