I hope this is in the right place, if not, please let me know so I can move it.

We own several properties and have always done out own maintenance and the like, only paying for help as needed for big jobs. We have an opportunity to change this that seems really good to us, but I have questions about the tax implications.

We have a man who would be willing to work as our property manager. He would do all landscaping, maintenance, and be a buffer between us and the tenants. He has experience and a good reputation (we've talked to people he's known most of his life). He wants $500 a month, which I think is a bargain to get back my time.

Here's where it gets tricky. He doesn't like his current living situation and would like to move into a room in one of our units. He has proposed the following arrangement. He gets the unit free ($400 a month rent) and we pay for his cell phone (a pay as you go unit) for up to $20 a month (for business calls), and $50 cash. There are no additional utilities involved. This seems like a good deal for both of us. But we are concerned about the tax consequences. If it matters, this is in Sacramento, California.

Here are my questions:

1. If we do the straight pay option, we give him a 1099 and can deduct the expense, correct?

2. If we do the rent deal, can we still deduct his "salary"? What about the phone and cash? Total value on the 1099?

3. Do we count the rent part of his pay as income? Does he?

I think that's it.

Thanks in advance for your help.