Hospitality Assets: Motels and Hotels
Cost Segregation Studies
Hospitality assets provide rich ground for cost segregation studies.
Hotels cost segregation benefits property owners by accelerating depreciation on personal property.
Short life items are found in every room, as well as common areas both inside and outside of the building.
Additional opportunities are found in the lighted parking areas and swimming pool areas.
Our 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 hospitality studies to pay back the cost of the study by more than 30 to 1 in the first year of study use. Note the actual
results highlighted in the table below. While most of these studies include catch-up years, the results are astoundingly positive, with over $100,000 in tax savings in the first year of study use!
Sample of Actual Study Results
Depreciable Basis
$7,513,390 $3,309,000 $8,292,875 $2,566,500 $1,541,605
Purchase Date
FEB 2014 JAN 2013 MAY 2014 NOV 2012 MAY 2015
Year of Study
2014 2015 2015 2015 2016
1st Year Additional Depreciation
$392,464 $451,748 $1,186,211 $492,635 $331,716
1st Year Tax Savings
$155,416 $178,892 $469,739 $195,084 $131,360
Year 1 Payback
34.5:1 59.6:1 156.6:1 65.0:1 128.9:1
Initial 5 Years Tax Savings
$709,682 $247,811* $829,856* $241,413* $239,115*
5 Year Payback
157.7:1 82.6:1 276.6:1 80.5:1 222.4:1* 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.
