It is with great pleasure that we share with you one of our biggest cost segregation case study results. Recently, Segregation Holding was engaged by the owners of the luxury Hotel Lawrence to see if a cost segregation study could help lower their income tax burden. They needed to increase their cash flow significantly. Generally speaking a cost segregation study is the process of identifying assets that are eligible to be re-classified as tangible personal property and land improvements. By re-classifying assets using cost segregation, the hotel would be able to take advantage of accelerated depreciation. This lowers the income tax burden while increasing cash flow for the hotel.
Our engineer began the cost segregation process by examining all relevant documents. These include all design and construction documents, contractor payment invoices as well as all other documents that would help our engineers to determine the cost basis for all components of the hotel. After the review, the engineer arrived on site to perform the cost segregation site survey. During this process, we photograph all assets that will meet IRS requirements for accelerated depreciation. Our original benchmark estimate had shown that a cost segregation study would reflect a tax benefit of $841,017 over the course of the next 10 years. This also included a $490,859 tax savings that would be applied to the current tax year. This estimate showed a potential reallocation of 20% to 5- & 15-year depreciation. This equaled more than 4 million dollars. Who would not be happy with that type of amazing savings, right?
However, when our team got back to the office and began the number crunching process, even more savings were uncovered. The final result of the cost segregation study showed the actual percent of asset relocation was 21.4%. As a result of these findings, the Hotel Lawrence’s tax savings was $962,965 to be applied over the next 10 years. The current year tax savings were $550,264. Just another amazing example of how the cost segregation results achieved by Segregation Holding most often exceed our clients’ expectations.
Would you like to lower your income tax burden and receive an enormous tax savings? If you own a profitable business, there is a good chance that cost segregation can help when applied by Segregation Holding. In fact, we even offer a guarantee, so why not request our free quote today?
Contact us at 972-897-8019 or 844-IRS-MONY!
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