Cost Segregation: A Strategic Tax Savings Workout for Fitness Centers

Strategic planning is vital for success in fitness and finances. Just as a tailored workout plan can sculpt the perfect physique, Cost Segregation offers Fitness Centers a customized tax savings workout by accelerating depreciation on specialized assets. What if you could write off up to 30-35% of your building's original purchase price in the first year? How would that financial fitness regimen help maximize your savings and fuel your growth? Let's dive into the world of Cost Segregation and explore how it can be the financial personal trainer your Fitness Center needs.

tax savings for fitness centers

Strategic Tax Planning Benefits

Align With Growth

Cost Segregation studies can be strategically timed with expansion projects, new equipment purchases, or renovations to yield optimal tax advantages. For example, an analysis could be conducted prior to opening a new location or renovating existing facilities to capture maximum depreciation upfront. The upfront savings can then be utilized for continued growth initiatives.

Match With Upgrades

Cost Segregation allows Fitness Centers to fully leverage new capital investments by accelerating depreciation on major equipment upgrades such as:

  • New treadmill models
  • Strength training machines
  • Lap pool starting blocks
  • Spin bikes

Depreciation optimization provides funds to reinvest in the next generation of equipment, keeping the gym on the cutting edge.

More Tax Savings for Fitness Centers

  • Accelerated Depreciation on Assets: Commercial cardio equipment and other specialized assets can be depreciated over a 5- or 15-year lifespan, allowing maximized deductions early.
  • Increased Cash Flow: Accelerated depreciation leads to immediate tax savings to boost financial fitness.
  • Average 29% Tax Savings: Fitness Centers can save an average of 29% on taxes in Year 1 with Cost Segregation based on analysis of over 500 studies.
  • Immediate Deduction Opportunities: The 2017 Tax Cuts and Jobs Act allows for an immediate deduction for the full costs in the first year for properties with a class life of 27 years.
  • Bonus Depreciation Extension: The bonus depreciation sunset was extended through 2027, with varying percentages for each year, offering ongoing opportunities.

Is Cost Segregation Right For My Fitness Center?

Ask yourself these questions to determine if your facility could benefit from this tax strategy:

  • Have you recently opened a new location or undergone a major renovation?
  • Are you planning an expansion, remodel, or equipment upgrade?
  • Do you want to maximize savings from new capital investments?
  • Could you utilize tax savings to purchase additional equipment or improve your facility?

If you answered yes, a Cost Segregation study could help you too. Read this case study to see how a Fitness Center in Vineland, New Jersey, benefited from Cost Segregation.

Free Assessment

To learn more about putting Cost Segregation to work for your Fitness Center, contact our experts at Engineered Tax Services for a Free Assessment.

Get Started

Conclusion

Cost Segregation offers a strategic, customized tax savings workout tailored to Fitness Centers' assets. Accelerating depreciation knocks out taxes to build financial strength. Start training your taxes for maximum performance today. With potential savings of up to 45%, isn't it time to give your Fitness Center the financial workout it deserves?

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