Cost Segregation Present Value Savings Analysis for an Apartment Complex
The best way to illustrate the direct financial benefits of a Cost
Segregation Study is through the following case study:
A taxpayer constructed an apartment building for $2.2 million and placed it in
service in 2005. Initially, $200,000 is identified for furniture and equipment
such as stoves, dishwashers, and other appliances. The remaining $2 million
of project costs are treated as 27.5-year property.
Assume the following:
16% of the construction-related costs should have been classified to a 5-year
depreciable life, as identified by the Cost Segregation Specialist
9% of the cost should have been classified to a 15-year depreciable life, as identified by the specialist
41% federal and state tax rate
8% expected rate of return
Here is how the depreciation deductions would compare in the first 5 years with a
Cost Segregation Study verses without a Cost Segregation Study.
The potential benefits derived from a Cost Segregation Study could be significant whether a
company is adding a $500,000 expansion or building a new $40 million hotel. The benefits
of a study are magnified even more if it falls within the bonus depreciation time period.
The R & D Tax Credit - A Missed Opportunity...Until Now
Specialized Molding Medical Company
$265,000+ Tax Credits Identified
Revenues: $21,000,000
Woodworking Machine Manufacturer
$200,000+ Tax Credits Identified
Revenues: $15,000,000
Metal Fabricator and Stamper
$300,000+ Tax Credits Identified
Revenues: $30,000,000
Plastic Injection Mold Builder
$395,000+ Tax Credits Identified
Revenues: $26,000,000
Precision Sheet Metal Production and Machining
$215,000+ Tax Credits Identified
Revenues: $12,000,000
Shipping Container Manufacturer
$400,000+ Tax Credits Identified
Revenues: $80,000,000
Plastic Injection Molding and Mold Builder
$300,000+ Tax Credits Identified
Revenues: $13,000,000
Owner of $15,000,000 senior living facility received a 5 year tax benefit of $980,000.
Owner of 3 auto dealerships received a 5 year tax benefit of over $1,200,000.
Owner of a large office building received a first year cash benefit of over $500,000.
Prototype
client hired us for both our cost segregation and R&D services and
received a total of over $650,000 in net cash savings.
Michigan manufacturing firm received a cash refund over of $850,000.
A
doctor located in Dallas, TX purchased a medical building for
$3,200,000 and received a 5 year cash benefit of over $180,000 after
engaging us.
Large law firm engagement to perform a
Cost Segregation Study and an Abandonment Study on their newly
purchased and renovated office building. The results totaled over
$300,000 in cash flow benefits.
Recently performed
a cost segregation study on a $40 Million retail mall in Seattle, WA
and the tax savings were in the millions of dollars.
Hired by a North
Carolina CPA firm to work with one of their clients who
purchased 3 office buildings in 2006. After completing the cost
segregation studies, the result was over $420,000 in net cash savings.
If we can't save your company money, you pay us nothing!
