REITS
Cost Segregation
Most of the REITS with which we deal are apartments of significant size, and as such, lend themselves very well to cost segregation. Short life items are found in abundance, especially in the interior of the rental units themselves.
Additional opportunities abound in all common area elements as well as often overlooked possibilities found on campus in ground preparation work, parking lots and drainage / retention areas. Our cost segregation studies also break out the IRS mandated Units of Property when considering the long-term components present in your building.
It is common for our REIT studies to pay back the cost of the study by more than 150 to 1 in the first year of study use. Note the actual results highlighted in the table below. You will see first year savings well into six figures on a consistent basis.
Sample of Actual Study Results
Depreciable Basis
$59,116,128
$40,448,736
$30,179,568
$45,946,624
$36,926,224
Purchase Date
5/1/2016
1/1/2016
9/1/2015
9/1/2015
6/1/2016
Year of Study
2016
2016
2015
2015
2016
1st Year Additional Depreciation
$1,756,827
$2,052,362
$938,561
$1,612,584
$1,179,386
1st Year Tax Savings
$695,703
$812,736
$371,670
$638,583
$467,037
Year 1 Payback
204.0:1
265.0:1
121.0:1
209.0:1
153.0:1
Initial 5 Years Tax Savings
$3,129,372
$2,112,608
$1,462,987
$2,632,554
$2,002,418
5 Year Payback
917.0:1
691.0:1
479.0:1
861.0:1
655.0:1
* Results from “Catch Up” studies which allow the owner of properties purchased in previous
tax years to benefit from cost segregation in the current tax year without filing amended returns.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.