In the latest episode of Unconventional with Bill Tessar, tax expert Tony Watson, Managing Partner of Robert Hall & Associates, shares his insights on strategic tax planning for real estate investors, business owners, and high-income earners. With over two decades of experience and a client roster managing more than half a billion dollars in investments, Tony offers a masterclass on how tax strategies can be a powerful tool for wealth retention and business growth.
The Power of Tax Strategy in Wealth Building
Many people think of taxes as just a necessary expense, but they can be a crucial factor in long-term wealth accumulation. “People think it’s tax savings, but it’s actually wealth retention,” Tony emphasizes. Strategic tax planning isn’t just about reducing your tax bill—it’s about keeping more of what you earn and reinvesting it effectively.
The Real Estate Investor’s Tax Playbook
Real estate investors often miss out on significant tax advantages simply because they don’t have the right strategies in place. One key approach that Tony highlights is deconstruction charitable contributions. Instead of demolishing outdated fixtures and materials during a renovation, investors can donate them to organizations like Habitat for Humanity. “One client received a $600,000 tax deduction just from deconstructing an $800,000 property,” Tony shares. With the right valuation and documentation, this can result in hundreds of thousands in tax savings.
Another essential strategy for investors is cost segregation analysis. This method accelerates depreciation deductions, allowing investors to front-load their tax benefits. “If you own a rental property, cost segregation can drastically lower your taxable income in the first few years of ownership,” Tony explains. This approach can be a game-changer for real estate investors looking to maximize their cash flow.
Business Owners: Tax Planning is Your Secret Weapon
For entrepreneurs, understanding the tax code can mean the difference between thriving and just getting by. One of the most powerful tools available to business owners is the Qualified Business Income Deduction (QBI). Introduced in the 2018 tax reform, this deduction allows eligible business owners to exclude 20% of their net income from federal taxes. “It’s one of the most powerful deductions for self-employed professionals,” Tony notes.
Another critical tax strategy for business owners is leveraging Bonus Depreciation and Section 179 Deductions. These deductions allow for major tax write-offs upfront for those investing in business infrastructure, vehicles, or equipment. Additionally, many investors and business owners rush to set up LLCs without properly transferring assets into them. “Just forming an LLC doesn’t protect your assets or provide tax benefits unless it’s structured correctly,” Tony warns.
Tax Planning is a Year-Round Strategy
One of the biggest mistakes people make, according to Tony, is waiting until tax season to think about their tax strategy. “Failing to plan is planning to fail,” he says. By engaging in mid-year and year-end tax planning, investors and business owners can optimize their deductions and avoid last-minute surprises.
The Future of Taxes: What’s on the Horizon?
With the changing political landscape, tax laws are constantly evolving. Tony discusses potential upcoming changes under the current administration, including the return of 100% bonus depreciation, potential IRS audit reductions, and adjustments to personal income tax brackets and deductions for high earners. “There’s a strong push to bring it back, which would be a huge win for real estate investors and business owners,” Tony explains.
AI & the Future of Tax Strategy
AI is making its way into the finance world, and Tony believes tax planning will be no exception. “We’re already beta-testing AI-driven tax software, but the human element in strategic planning remains irreplaceable,” he says. While AI can help analyze tax codes faster, experienced professionals are still needed to interpret and apply the best strategies for each client’s unique needs.
The Bottom Line: Taxes Can Make or Break Your Wealth Strategy
The key takeaway from this episode? Smart tax planning isn’t just about compliance—it’s about optimizing your financial future. Whether you’re a real estate investor, mortgage broker, or business owner, understanding the tax code and working with an experienced advisor can help you retain more wealth, reinvest wisely, and scale your financial success. As Bill sums it up: “Once you get your arms around the complexities and opportunities within tax strategy, it changes how you spend, invest, and grow your money.”
More Insights and Getting In Touch with Tony Watson
For those looking to optimize their tax strategy, Tony offers free consultations through Robert Hall & Associates. Visit RobertHallTaxes.com or email Tony directly at TonyWatson@RobertHallTaxes.com to learn more about how tax planning can transform your financial future.
Don’t miss future episodes featuring top experts in real estate, lending, and entrepreneurship. Follow @CV3Financial on social media for more Unconventional with Bill Tessar and subscribe to the podcast for more unconventional strategies to build your success. And as Bill always says: “Dare to be unconventional.”