Projects
Office
Medical Building
Engagement Overview:
Bedford was engaged by a financial holding company to conduct a cost segregation study for one of their retail/office properties. The objective of the study was to identify assets that could be moved to shorter recovery periods in order to accelerate depreciation and defer taxes.
Property Overview:
The upscale property is a two story building occupying a portion of a city block in a major shopping area. The property includes an adjoining upper level parking deck which is constructed above the ground level parking in the rear of the building. The first floor space consists of specialty boutique outlets and a bookstore. The second floor space consists of office space for the bookstore. The property has a footprint of approximately 44,620 square feet with a total gross area of approximately 90,400 square feet and occupies a 1.12 acre site. The property has a cost basis of $9,363,580 and was placed in service in May 2004.
Engineering Process:Office & Retail
Our engineers examined all the design and construction documents, contractor payment requisitions and other related data to determine the cost basis for every component of the building. Next, our engineer conducted an onsite study to identify, measure, quantify and photograph the existence of all assets eligible for accelerated depreciation. Finally, our team (onsite engineer, senior engineer and tax specialist) reviewed the cost segregation study and certified its completeness and accuracy.
Estimate of Benefits & Savings:
The pre-engagement estimate we provided showed a potential reallocation of $1,393,556 or 15% to shorter depreciable lives. The projected tax benefit was $268,874 in NPV savings over the next 10 years with $18,476 in tax savings available for the current tax year.
Results:
The cost segregation study reallocated $1,647,990 or 17.6% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $372,470 in NPV savings over the next 10 years with $22,275 in tax savings available for the current tax year.