taxes
Tax Planning Strategies
for Real Estate Investors
Tony Watson with Robert Hall & Associates
provides money-saving tips for investors.
by Stephanie B. Mojica
inside and outside of California. Unfortu-
nately, in Watson’s professional experi-
ence real estate and tax education tends to
be the exception rather than the rule.
“One of my major concerns with the
general public is that people don't quite
understand what they should at the level
of investing they’re in, whether they’re in
their thirties, forties, fifties, even in their
sixties and seventies,” Watson said.
Watson says most people do not under-
stand how much of a tax deduction real
estate investments can create. On the flip
side, a lack of basic tax education can
cause investors to accrue unexpected tax
T
he ultimate tax
deduction for any
American citizen
is a well-planned invest-
ment in commercial or
residential real estate,
according to Los An-
geles-based consultant
Tony Watson.
People flipping three or more real estate properties
annually need to pay careful attention to how they
structure their businesses, according to Watson.
Realty411Guide.com
tial tax benefits beforehand can probably
alleviate most if not all cases of investor
burnout, Watson says. The advice he
would give to a “flipper” would be slightly
different from the advice he would give to
someone with a more long-term invest-
ment outlook. A flipper generally keeps a
property less than a year before selling it
for a profit.
People flipping three or more real estate
properties annually need to pay care-
ful attention to how they structure their
businesses, according to Watson. If the
investor is not prepared, he could end up
owing self-employment taxes along with
the typical state and federal income taxes.
Thus, not having a corporate structure
bills, especially if they choose to invest
as a sole proprietor rather than through a
corporate structure.
Another problem Watson tries to curtail
through one-on-one education and his
group discussions is the misconception
that people can easily make thousands,
even hundreds of thousands of dollars,
through real estate investing.
“Once a person does their first deal, it’s
either a make or break situation at that
point,” Watson said. “Because I have a lot
of clients who come in gung-ho about try-
ing to get investing in real estate or getting
their first investment off the ground, they
get hands-on with the property and then
they get worn out and then that’s the last
property that they try to invest in.”
A thorough discussion about the poten-
Watson, a tax consultant for Robert
Hall & Associates since 2005, spends
part of his time as the firm’s official
public speaker. He discusses tax ins
and outs with audiences ranging from
10 to 1,000 people, utilizing his 13
years of real estate industry experi-
ence to educate potential investors.
“Real estate investing and actual
income taxation kind of go hand-in-
hand,” Watson said.
Watson, who earned a bachelor’s
degree in business administration
from Chapman University in Orange
County, California, grew up in a
family of real estate investors. He
along with his brother and father each
have years of experience investing in
commercial and residential real estate
PAGE 56 • 2014
Continued on pg. 111
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