PART 1 - How to build generational wealth as W2 employee?

May 16, 2023

Are you a W-2 employee who is tired of trading hours for dollars? Are you fed up with choosing between making a living and living your life?

In this episode, we talk with Gib Irons about how to build wealth as a W-2 employee.

Gib is the managing partner of Irons & Irons P.A., a family and personal injury law firm in Greenville, NC. He wanted to start building generational wealth for his family, so he began investing in real estate.

When he heard Mike Pine mention, during a talk at a mastermind, that he could use the tax code to gain tax breaks on his real estate investments, he quickly scheduled a consultation with Pine & Company CPAs to learn more.

They have been working together to proactively plan for tax season ever since. Gib is able to pay the legal minimum in taxes and use the money he saves to reinvest in the economy and grow his wealth.

In this episode, we discuss:

  • Creating generational wealth as a W-2 employee through real estate investments.
  • How Gib Irons found $250,000 in hidden money through his real estate investments.
  • The basics of the qualified real estate professional exemption.
  • How to reinvest hidden money to continue growing your wealth.
  • Short term rental deductions.
  • Proactive vs reactive tax planning.

To learn more:
You can learn more about Gib Irons and his real estate syndication investment opportunities for lawyers at or email him directly at [email protected].

To access the bonus content mentioned in the episode, go to 


Kevin Schneider: [00:00:00] Welcome to The Hidden Money Podcast. Today we have one of our favorite clients here, Gib Irons. Gib is the managing partner of Irons and Irons, which is located in Greenville, North Carolina. He specializes in divorce law and personal injury litigation. But on top of that, Gib has a very interesting story.

He's almost a jack of all trades, has his hand in many pots, real estate, alternative investments outside of not only practicing. He is actively involved in these areas. And so I don't know when he finds time to sleep. So please welcome to the show, Gib Irons. Welcome Gib.

Gib Irons: Thanks Kevin! good to be with you. I appreciate you having me on today.

Kevin Schneider: So if you could just give our listeners a little backstory. You're a very interesting person and you're very knowledgeable in a lot of areas. How did you get to where you are?

Gib Irons: Kevin, I'm an attorney, a trial lawyer from Eastern North Carolina. [00:01:00] And I've been practicing law for 17 years now, and during my career I've tried a, lot of family law cases all the way down from a basic custody type case or a property distribution case all the way up to high net worth divorce cases.

So I've lived a good portion of my time in the courtroom over the past 17 years. And I have four attorneys in my law office and have several paralegals and support staff members. Got into real estate investing just more recently in life. I think it was in 2019 when I started into real estate investing and that has just opened a bunch of doors for me. And given me a lot of opportunities to not only increase my net worth, but also to save tremendous amount of [00:02:00] money in taxes. Which, you quite frankly is, the expense that I've had as a practicing attorney, being a W2 employee.

always paid a tremendous amount of taxes and had high ordinary income burden uh, deal with.

Mike Pine: We're not gonna hold it against you that you've been a practicing attorney for the last 17 years. As we've become friends over the last couple years I've really been refreshed and found it incredibly refreshing to see that not all lawyers are bad people. So they, and I do consider you a good, trusted friend now, Gib. You mentioned that tax was your biggest expense, or one of your, it probably was your biggest line item, expense for over a dozen years. And what got you to start investing in real estate in the first place? It wasn't the tax advantages. Was it? What got you in there?

Gib Irons: I originally started out investing in real estate just as a way to build wealth and to create a [00:03:00] legacy, for my wife and my children, and to create generational wealth. I saw real estate as, of the fastest ways to build wealth. And I actually um, When I started investing in real estate, it was 2019. believe it was August of 2019, and I went on to buy 14 single family condos over the next 14 months.

Mike Pine: Wow.

Gib Irons: majority of those 14 condos had to be renovated. So quite a few of them. We tore them down to the studs. We did a massive interior renovation included, granite countertops, tile back splash stainless steel appliances.

We we really made these apartments as nice as we could possibly make them, the type of place [00:04:00] that you or I could stay and be comfortable. And so we took these properties that were built in the 1980s that had received no attention in many years and gutted them. And we were spending hundreds of thousands of dollars on the upfitting of these apartments and then renting them out for a much higher monthly rent.

And honestly, I had talked to prior CPA, and they had told me that there was basically no tax advantage to those investments. And I'm member of three different mastermind groups, but I met you and Kevin at a mastermind group, and you explained the real estate professional qualified real estate professional designation, and you did so very [00:05:00] eloquently. It was very simple, easy to understand. And know we're gonna talk a little bit about short term rentals later, but you also explained material participation under the tax law.

And at that point, I knew think Mike I, approached you right after you got off stage and I said look I got to get to know you. so I think within a couple of days of that initial meeting had a follow up meeting.

I sent you past three years of tax returns. And you and I jumped on a call and you said, Gib! you thought about the qualified real estate professional designation? What does your wife do for a living? there, is she available to tend to these properties?

And she was, it was something that I was doing begrudgingly. I was managing all of our properties and trying to manage [00:06:00] the law office in the three different locations that we have. And just juggling a bunch of balls in the air. these construction projects, you at times we had four different contractors in four different properties doing four different remodels.

And they were it was like a revolving door at my law office with them coming in and out all day long, picking up checks and materials. And once my wife I had that conversation, it was a no-brainer. She became property manager of the 14 properties. 

And was honestly like a light bulb went off, you I heard you speak.

And, And uh, was a complete game changer to be honest. it was one of the most pivotal demarcation points in our our wealth building career.

Mike Pine: That is awesome. That is really awesome and I'm super glad that you came and grabbed me [00:07:00] after that. I just wanna point out that conference we met at had very little to do with real estate, professional designation or long-term rentals. It was something focused on a different area.

But it just shows how every potential taxpayer out there. Not every, but almost everyone has a complete different fact set. And even though you and I both went to this conference to talk about a whole nother area in the tax world because you'd already made these great investments. You weren't using the tax title wag the business stall, you made these investments to grow your net worth and to grow your financial freedom you made them because up until then you were stuck creating your time for money.

And that's not an easy road to try to build financial freedom and have time to spend with your family. But you made these great decisions and it just so happened that there were some hidden money in the tax code that you weren't aware of at the time. And once you found those, you didn't have to change your investment philosophy.

You'd already made the investments. All you had to do was take advantage of the tax law that [00:08:00] was already there for your benefit. It was just sitting there, it was hidden money just sitting there waiting for you to pick this fruit off of the tree. And within six months, I think of that time your wife was a legitimate real estate professional and I don't know how big of a difference would you say that tax return, that first one that we filed with your wife is a real estate professional.

How much, how do you wanna say amount or percentage? How big of a savings was that?

Gib Irons: Yeah. I, willing to talk about it openly, you it just so happened coin coincide with our very best year ever at the law firm. So it was really a culmination of things that had been taking place for you building up for many years. And I think we we did 16 call segregation studies that first year and 14 of them were for properties that were purchased in 2019 and 2020, [00:09:00] and two of them were for properties that were purchased in 2021, which was the first year that, were able to claim that my wife was able to act as property manager and qualify as a qualified real estate professional.

But I remember the law firm settled a case in 2021 for $5 million. It was very big wrongful death, commercial, trucking accident case. And so we had the highest income year that we'd ever had, and we had the 16 cost segregation studies and the bonus depreciation. so I believe that it saved me about $250,000 in tax.

Mike Pine: Wow, $250,000 of hidden money that would've been available there for you anyways, and all you had to do was pick that fruit. That is awesome.

Kevin Schneider: That is [00:10:00] amazing testimony. Amazing testimony

Mike Pine: I just wanna point out for listeners, we're gonna go into on our bonus content, which is available at, and we'll talk more about real estate professional designation, how people can qualify, how another spouse can qualify. You do have to qualify it's legitimate rule that you have to follow, but it's in y'all's case and in so many other taxpayers case, it's very possible and in y'all's case, even probable to qualify. Sorry to interrupt, Kevin.

Kevin Schneider: No, that's exactly where I was gonna go with it is just because the strategy that we utilized with Gib is available to a lot of other individuals out there, and we typically see it with one high income earning spouse and the other spouse is typically at home. And so we could leverage the tax code to utilize that as long as it fits in, with their financial plan.

And it also, the spouse has to be on board. There's gonna be work involved, which we'll get into the bonus content. So Gib was in a unique situation where his wife was like, yeah, [00:11:00] this is something I can do. So we'll get into that. But I just did want to clarify that even though if you buy long-term real estate, it doesn't automatically mean we get to offset your active income.

There's gonna be those hurdles and there's gonna be some traps in there. And that's why you want a qualify tax professional to guide you through that to make sure that these deductions are not only available for you. And if they are, we need to take them safely. And we don't want to just start throwing around depreciation numbers and putting at risk on an audit and occurring penalties and interest potentially. So we wanna make sure your ducks in a row 

Gib Irons: Well, I was just gonna say, you was the conversation that my wife and I had to have to talk about. My law firm is growing. We're doing very well. We've expanded to where now we've got three office locations and I've got all these other attorneys and I've got more on my plate than I can handle.

Are you open to doing that? [00:12:00] And is a lot of work. Being the property manager of those 14 long-term rental properties that we have involves her, dealing with all the tenant issues, signing the leases, showing the apartment every time we have a turnover, she's gotta go out there and do multiple showings.

And we've got three children at home and got an eight-year-old, a six-year-old, and a three-year-old. And so she was already busy, but, in school and during the time that they're in school, she runs around and sends the maintenance people out to the apartment complex.

But really, if you think about it, where else is she gonna earn, $250,000

Kevin Schneider: Yeah.

Gib Irons: the tax savings made it something that even though it is a lot of work, it was something that was well worth doing.

Kevin Schneider: Oh my goodness, that's a good way to put it, her salary was $250,000 that year. And a lot of stay-at-home moms are the most underpaid. [00:13:00] That is such a hard line of work. What I love about this is you're able to also just take those tax savings and now you can have 250,000 to reinvest and now you can start to snowball an investment portfolio and utilizing more tax positive investments.

So what was your, after that big year of utilizing the long-term real estate, what'd you do with your tax savings? I'm sure you didn't put it under a mattress. Where'd you go with it?

Gibb Irons: Yeah. So, I immediately redeployed that money that I had saved. That I didn't have to pay in tax. And what I did was I bought a 5,500 square foot short-term rental property in Sevierville, Tennessee.

which I bought the property for 1.85 million. And made a down payment of $370,000 was [00:14:00] a 80% loan to cost deal that that I had arranged with the lender. had very favorable terms. I think the interest rate is 2.5% which was prevailing rate at the time.

And so I was able to redeploy that money in the very next year. And once again, take bonus depreciation a cost segregation study and take bonus depreciation.

Mike Pine: So is that property? It wasn't a long-term rental though. You pivoted and opened a different type portfolio. Right?.

Gib Irons: That's right. So this is a vacation rental and it's a short term rental vacation property. on Airbnb and Vrbo. And I've got a full-time property manager but when we first started out closed on the property in December of 2021 and we had to source all the [00:15:00] furniture.

It was a brand new property, so it had no furniture no dishes, no pots and pans, no artwork. You had to source all of that stuff and it took a tremendous effort to do that. We actually closed on December 21st, and I believe we had our first guest stay on December the 27th. in the time leading up to the closing a, we were ordering all sorts of furniture and artwork and electronics.

And then from the day that we closed, we had like six or seven days to prep the property our very first guest. And just a very narrow margin right there. leading up to Christmas time.

Mike Pine: Yeah I remember having conversations with you during that time, even prior to closing. You're already building it out and working on it, and that was a very stressful week for you. But man, did it pay off? You got it done. You achieved your material participation, you got it online and earning, [00:16:00] and got great ratings pretty quickly after that.

And saved a lot in taxes that year too. That was awesome. More hidden money.

Gib Irons: Yeah. the short term rental property we bought hundreds of thousands of dollars of furniture and artwork. So not only did we have, you cost segregation study, but we also had a bunch of furnishings, you hundreds of thousands of dollars. Cuz normally you're not furnishing a 5,500 square foot house at one time.

But this was new, it was new construction. There was absolutely nothing. We had purchased nothing. And so that was back during the, covid time as well. So we had a bunch of supply chain issues and, half of the stuff that we ordered was never delivered or we had to buy stuff just to get us through, you just to have the place ready for the first couple of guests.

And then we had to [00:17:00] buy additional furniture the following year when we had more time.

Mike Pine: And just a note for our listeners, furniture is an asset that qualifies for bonus depreciation, and in that year there was a hundred percent bonus, so the investment, it was great investment. It made the place a property that a lot of people wanna visit. As a matter of fact during our internal lunches here at the firm, I think your property has become the favorite staffs and teams is that's where we want to go.

Can you get us a place? Can you get us to stay there with Gib? But when we look at the average daily rate on that, Kevin and I both say, No, not gonna. That's an amazing place you built out there.

Gib Irons: Thank you.

Mike Pine: So then comes the next year, what you'd figured out how to grow your portfolio, how to grow your net worth.

You'd figured out how to maximize taxes while doing these great investments. 

Kevin Schneider: But I also was gonna get into the interesting part that I found is the timing, because there was [00:18:00] that stressful period. And as you're listening to this, you may just think, well, why did he just put all this stress on getting it before year end? Why didn't he just tell his guests, "Hey, we're gonna do this in January?"

Well , that would've been the major difference between getting a deduction in that tax year. Cuz what the IRS wants is that property to be available for rent in service. That, in-service date is what triggers all the tax plan on this property. So you could see how pushing contractors and pushing all the people, getting the furniture and art delivered, that is so vital because this property needed to be in service before year end in order to utilize the deduction.

Otherwise, if the clock turned on midnight on December 31st, and we're creeping into January. All this work, all this cost segregation, all that, would've had to wait till the next filing season, which would've been a year, which would've put the cash not back into Gib's pocket, the savings until another year and three, four months.

So just that time period, getting that in service was so vital. And so I just wanted to point that out is because you hear these awesome [00:19:00] stories and strategies, but behind the scenes, Gib alluded to it's work. It is a lot of work, but the fruit is there. It is really there

Gib Irons: We had some periodic planning calls throughout the year where I spoke to both of you gentlemen we talked about okay, you know, one of the big differences in working with your company, from the prior CPAs that I've had, and I've had some of the biggest CPA firms in the world working for me.

I've had three or four different CPAs over my career. And one of the, biggest things was instead of doing all the tax planning after the year is over then I'm contacting you in January and saying, Hey, Kevin, Mike, let's talk about how can I save taxes for last year, retroactively, that it just can't be done that way.

And I never had a proactive [00:20:00] CPA firm that was calling me and saying, Hey Gib, we know you just hit a really big case and you know, you generated a seven figure fee on that on that one case, and that's gonna put you at a trajectory to pay a lot more tax than what we were anticipating.

So let's talk about it like a quarterly or monthly basis, and let's have those periodic telephone calls where you all can tell me cuz I don't know. I know that you make more money, you pay more tax, but I needed to get with you on what kind of strategies can I employ and what is the timeframe that I have to do those.

And with that short-term rental property it was abundantly clear that I was gonna pay a tremendous amount of tax if it didn't close. And of course builder delayed closing two or three times. And so it literally was a nail bitter that came down to the [00:21:00] wire. It was almost like watching a sports game where you know at the last minute you don't really know what's gonna happen.

it worked out and we were tremendously fortunate, but it was because I had guidance throughout the year. I've never had a CPA firm that said, you know, Gib, let's talk quarterly, or even better yet, monthly. That one hour call that I have with you once a month, once a quarter, however frequently we can do it, pays huge dividends.

Mike Pine: That's a great point. So we always talk about using the tax code to your advantage versus being a victim to it? The main way, or one of the main ways to do that is to be a proactive tax planner, not a retroactive tax victim. And it's nice and refreshing to get clients. Not all clients are as awesome as you, but it's nice when we have clients that actually will work proactively with us.

We still have a lot of [00:22:00] clients that do some great things, and they're incredibly smart, but they're so busy we can't get them on the phone or to respond to an email until after the end of the year, and it's too late in most cases. So you should be doing your tax planning throughout the year, not after December 31st. In your case we've just walked through two years of incredible tax benefits and great financial portfolio growth with you. 

Again, I believe by saving you those taxes so you could redeploy those into additional investments, you're helping grow the economy doing much more so than my opinion, than the government does.

And if you would've paid that money in tax and not gotten it, it would've reduced the amount of economic growth that your plans and your portfolio generated. So once again, I believe it is our patriotic duty as Americans as citizens to do whatever we can to grow the economy. And it's the right thing.

The whole reason these laws are available, the whole reason you were able to take advantage of bonus depreciation is our society and Congress and [00:23:00] even the president got together and said, Hey, these are the things our economy needs to keep the economy growing, to improve the economy strength and to lift up the tide for all people in the country.

So you're doing a great job on helping grow our economy. Again, this is good stuff. This is not cheating. This is not playing it loose with the tax. All this is utilizing the incentives our society got together and put into the tax law to follow the rules and to grow the economy, which happens to also grow your personal portfolio.

Most people think of taxes only as an expense. In each episode of the Hidden Money Podcast, we will bust this myth and reveal ways you can use taxes to your advantage. Because there's wealth inside the tax code. There's hidden money there.

Henry: Thank You for listening to Gib Irons today. We will continue the conversation with him. Don't miss part 2 of our conversation on our next episode.

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