Can you prepay a mortgage and file as a s corp to lower the overall tax liability?

[flbxant]

Example $7,000 annual net profit used to prepay mortgage balance down. Rental property is owned by an LLC.

[MichaelL1 · Accepted solution]

No, this strategy will not work, as a mortgage payment of principal is not a deductible expense.

It helps the balance sheet but only interest payments are deductible on the mortgage.

[flbxant]

My question pertains more closely to designating a salary of a sole owner of an S Corp. Lets take the $7,000 profit for example. I set a salary for myself to let's say $1,000 and use the remaining $6,000 to pay off the mortgage loan (Reinvesting in my business to lower future interest rate cost). Could this be done? And if so what do I pay taxes on?

[MichaelL1]

In your example with some different facts, your K-1 would show the $6K profit and your wages paid to you would be $1K so the whole $7K is still taxable income to you.  
Note: if you do pay yourself a salary make sure that the employment taxes are filed on the salary.