Example of Cost Segregation and Tax Savings
Following is a hypothetical example of an investor acquiring an apartment building for one million dollars. It compares using standard depreciation to enhanced depreciation after a cost segregation analysis is completed and a report is prepared and utilized. One million dollars has been used as an example to make it easier for the reader to extrapolate for larger or smaller properties.
This example is not intended as a guarantee of results. The assumptions made are reasonable average numbers, however, all properties are unique, and every taxpayer's situation is different. Nevertheless, the example helps to explain how and why cost segregation is valuable for most investors, substantially deferring the payment of state and federal taxes while increasing their cash flow for many years.
Purchase Price of Apartment: $1,000,000
Land Value @ 25% 250,000
Value of Depreciable Assets $750,000
Standard Depreciation (27.5 years) $27,273/year
After Cost Segregation Analysis *Depreciation (15 years): $50,000/year
Additional Depreciation Available: $22,727/year
Assuming a 30% combined state and federal tax bracket:
$22,727 x 30% = $6,818 Annual Tax Reduction.
Let us provide you with a complimentary cost segregation analysis for your property to determine your savings.
*This is a blended estimate