Owning investment real-estate makes you the boss. In the past, as the owner, you only had access to the funds as profit earned, which were later invested in other investment real-estate to grow your empire. But recently, a new trend has popped up in the market, where property owners pay themselves salaries for the time and effort that they put into the property.

If you look at it, it is totally fair, and definitely a good initiative. Several entrepreneur magazines have published a number of case studies based on how despite being the boss, investment real-estate owners should be paid as employees for their hard work and effort. Some also discuss the tax benefits and drawbacks that come with the decision to show all sides of the scenario.

On average the percentage increase in owners’ salaries raises between 5 to 20 percent based on the increment in the profit after every tax year. But while making payments to themselves, owners need to keep in mind that the salary will be accounted for as personal income and will be taken into account by the IRS for taxation purposes.

Word of Caution

Putting in the time and effort in your property definitely gives you the right to get paid for it. But at the same it, it also requires you to be practical when it comes to deciding how much you should be paid. The more salary you get, the more tax burdens you will have to endure and the lower your investment funds would be for your next big investment. So make sure to be true to yourself and only take what you believe would be best suited for you and your investment portfolio. Consulting a tax specialist is highly recommended!