|
A Cost Segregation Study will move a portion of your
building’s costs from 27.5/39- year real property
depreciable life into either a 15 year-land improvement or 5
and 7-year personal property depreciable lives by
reclassifying their categories. The following is an example
of the increased cash flow and accelerated tax deductions
you can receive after completing a Cost Segregation Study on
a $4,000,000 commercial building.
|
Property Class |
Before Study |
After Study |
| 39 Year
Property |
4,000,000 |
3,000,000 |
| 5 Year
Property |
|
360,000 |
| 15 Year
Property |
|
640,000 |
| Total |
4,000,000 |
4,000,000 |
|
With Study
| |
5 Year |
15 Year |
39 Year |
With Study |
|
Year |
(200 DB) |
(150 DB) |
(Straight Line) |
Total Deductions |
| 2007 |
128,000 |
18,000 |
41,730 |
187,730 |
| 2008 |
204,800 |
34,200 |
76,920 |
315,920 |
| 2009 |
122,880 |
30,780 |
76,920 |
230,580 |
| 2010 |
73,728 |
27,720 |
76,920 |
178,368 |
| 2011 |
73,728 |
24,948 |
76,920 |
175,596 |
|
Without Study
|
Without Study |
|
Total Deductions |
| 55,640 |
|
102,560 |
|
102,560 |
|
102,560 |
|
102,560 |
|
|
Increased Deductions |
Increased Cash Floe |
| |
(41% Tax Rate) |
| 132,090 |
54,157 |
| 213,360 |
87,478 |
| 128,020
|
52,488 |
| 75,808 |
31,081 |
| 73,036 |
29,945 |
|
Summary of
Your Savings |
|
Increased Depreciation Deductions for Years 1-5: |
$622,314 |
|
After Tax Increased Cash Flow for Years 1-5:
|
$225,149 |
|
After Tax Increased Cash Flow for Year 1:
|
$54,157 |
In the above example, you would
receive $132,090 of additional depreciation in the first
year by utilizing a Cost Segregation Study. Using a
combined federal and state tax bracket of 41%, you would
save $54,157 in the first year. |
