My wife and I jointly own a duplex.
The bottom line answer is no, an owner can not pay themselves to manage rental property they own. Doing so makes no sense anyway. You collect rent, put it in your self pocket and pay taxes on that income. Then you pay yourself by removing the money from your left pocket, putting it in your right pocket and paying taxes on it *again* with the addition of social security and medicare tax. Not only is that going to raise flags at the IRS that will result in an audit, but it's also illegal.
Would it make a difference if I was sole owner of the renal property?
Then you could legally pay your wife a management fee that you would report by issuing here a 1099-MISC. But for that to be legal she would have to agree to file a quit claim deed on the property, and chances are the lender who holds the mortgage would not allow that, as it would be a direct violation of your loan agreement possibly resulting in an immediate foreclosure on the property.
Your wife would then report that income on SCH C as a part of your joint tax return. Then, in addition to paying taxes on it again with the social security and medicare tax, she would also pay an additional 15.6% self-employment tax.
So if you and your wife have no problems with paying more taxes, then by all means go for it, after getting written permission from the lender to remove your wife from the property ownership deed.
