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Cost Segregation and Disposition Study for a Dental Office in Waco, Texas

$66,661 in Total Realized Tax Savings


Cost Segregation Study Details – Building Purchase (2016) and Improvements (2017):  Engineered Tax Services performed a cost segregation engineering review of building components and site improvements on a single story building used as a dental office in Waco, Texas. The cost segregation benefit included a reclassification of 39-year depreciation class life assets into 5 and 15 year class lives, resulting in a combined benefit of $66,661 on 5 and 15 year-assets for the purchase and $610,261 accelerated 5 and 15-year assets on the improvements.

Additionally, ETS’ next generation cost segregation study captured a disposition deduction of $151,967.32 for undepreciated assets no longer in service under the final tangible property repair regulations.

When combined, these additional “next generation” benefits clearly demonstrate why cost segregation has become a powerful tax tool for real estate clients as a result of the final tangible property regulations (T-Regs).

2016 Purchase: Study Type (Medical Office Building – Texas) Class Life Percentage Accelerated Tax
Cost Segregation   5-Year  17.39% $26,764.95
Cost Segregation  15-Year  25.92% $39,896.64
Cost Segregation  39-Year 56.69% $ 87,255.18
Total Building Cost    $153,916.78

% amounts relate to how much was reallocated from the depreciated basis

Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

 

2017 Improve: Study Type (Medical Office Building – Texas) Class Life Percentage Accelerated Tax
Cost Segregation   5-Year  36.22% $486,099.73
Cost Segregation  15-Year  9.26% $124,215.86
Cost Segregation  39-Year 54.52% $ 731,589.06
Total Building Cost    $1,341,850.65

% amounts relate to how much was reallocated from the depreciated basis

Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

   

Cost Segregation

Engineered Tax Services, Inc. (ETS) has helped thousands of property owners nationally increase their cash-flow by accelerating depreciation through our cost segregation studies. Our cost segregation studies work to uncover potential tax savings and increase cash flow through reclassification and depreciation of property. ETS provides a “Detailed Engineering” review as part of our reporting process, working seamlessly with the IRS and your CPA firm for minimal disruption to your business.

Disposition 

When you undertake demolition or renovate a building and tear out old lighting, HVAC units, and other building parts, these assets are disposed of. As such, their book value can be treated as a business deduction. Tangible personal property within a structure can be written off when a building is demolished or remodeled.  The value must have been identified prior to the demolition and it must not have been purchased with the intent to demolish. Learn more about the disposition studies here or visit our disposition calculator here.

medical office

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