Cost Segregation Study on a Apartment Complex in Upstate New York

$1,894,081.46 in 1st year Total Realized Tax Savings

Without a Cost Segregation Study, an upstate New York $26 Million new construction apartment complex placed in service in the last quarter of 2016 would generate a 1st-year depreciation of $994,697.64. By applying a cost segregation study, the property investors accelerate depreciation, for the 1st year to $6,090,253.99. This acceleration in depreciation allows the property investors to reduce their tax liability and in turn increase their bottom line. By breaking down the building asset into components, cost segregation also aids in future benefits of abandonment, repairs, routine maintenance, and overall asset management. ETS performs hundreds of cost segregation studies on a monthly basis for property owners, providing a detailed engineering review of assets including special purpose mechanical and electrical systems, decorative finishes, site improvements, and any process related to special purpose construction.

Purchase Price of Building: $26 Million

Building Type: Apartment Complex

Building Location: Upstate New York

$1,894,081.46 in first-year tax savings


Cost Segregation Summary

Cost Segregation Benefit

Study Type Class Life> Percentage Accelerated Tax
Cost Segregation 5-Year 20.41% $3,860,236.92
Cost Segregation 15-Year 10.11% $1,480,420.71
Cost Segregation 27.5-Year 69.48% $749,596.36
Total 1st Yr Depreciation with Cost Seg $6,090,253.99
Depreciation 1st Year without Cost Seg. 27.5-Year 100% $945,454.55
Total Difference in Depreciation 1st Year $5,144,799.44

% 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.