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Cost Segregation, Disposition, and Repairs & Maintenance Study for a Hotel in Jacksonville, Florida

$1,277,413 in Total Realized Tax Savings


Study Details:  Study Details – Hotel Purchase & Improvements:  Engineered Tax Services performed a cost segregation engineering review of building components and site improvements on a 3-story 50,000 sq. ft. hotel in Florida. 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 $1,188,388 on the purchase and $89,024.86 accelerated 5 year on the improvements.

Additionally, ETS’ next generation cost segregation study captured $105,354 in disposition of assets no longer in service on the purchase as well as identify $223,102.00 in qualified repairs on the improvements 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).

Study Type  Class Life Percentage Accelerated Tax
Purchase  5-Year  26.63% $852,465.78
 15-Year  10.49% $335,922.58
 39-Year  62.88% $2,013,014.01
Total Building Cost   100% $3,201,402.38
The original basis was reduced by the opportunity to write-off $15,125 in retired systems and $223,102 in repairs and maintenance items

 

Study Type  Class Life Percentage Accelerated Tax
Improvement  5-Year  37.41% $89,024.86
 39-Year  62.59% $148,942.14
Total Building Cost   100% $237,967.00
The original basis was reduced by the opportunity to write-off $15,125 in retired systems and $223,102 in repairs and maintenance items

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.

New York City - August 7, 2015: View across Manhattan Meatpacking District and Chelsea from above, at sunset with The Standard Hotel in view.

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