Cost segregation delivers another great ROI! A prominent Orthodontist engaged a cost segregation study of his thriving dental professional’s facility in Kissimmee, Florida. He wanted to maximize his depreciation and cash flow by determining what assets qualified for the Modified Accelerated Cost Recovery System (MACRS) method of depreciation.
The initial benchmark analysis showed an estimate of approximately 18% of the real property assets could be segregated into tangible personal property asset categories. Real property is considered Section 1250 property and tangible personal property is considered Section 1245 property. Section (§) 1250 property is depreciated over 39-years and §1245 property is depreciated over 5-, 7- or 15-years depending upon the ultimate reallocation classification.
After a thorough survey of the property by an architect trained in cost segregation and the components comprising the asset, the cost segregation study report revealed an amazing 37.2% qualified for reclassification to the 5-year category. Extensive cabinetry, partitions, medical equipment, and decorative items (accent lighting, molding, etc.) were many of the 5-year assets, and…
15% qualified for reclassification to the 15-year category, including, but not limited to, considerable landscaping, asphalt parking, sidewalks, curbs, site catch-basin, and signage.
Our engineer-review team examined all design and construction documents, contractor payment applications, appraisal, and other related data to determine the cost basis for every component in the building. Our team reviewed the cost segregation study report and certified it’s accuracy, voracity and strict adherence to the IRS’ Cost Segregation Audit Techniques Guide.
Our cost segregation study resulted in a total accelerated depreciation of $112,793, or 52.2% being rescheduled to 5- and 15-year property. As a result, the property owner will save over $8,000 in first year tax payments and realize over $39,500 in gross after-tax savings in years 1 – 6.
Cost segregation delivers results every time it is applied!
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