Issue
A long-standing real estate client acquired a new property and needed clarity on how the purchase would affect its tax position. While the client had worked with us for years, the acquisition introduced new variables, including construction components and depreciation timelines, that required a fresh analysis.
The client’s key question: Would a cost segregation study generate meaningful tax savings without introducing unnecessary audit risk?
Solution
We evaluated whether a cost segregation study aligned with the client’s tax strategy and risk profile, balancing potential tax savings against audit considerations and timing impacts.
After confirming the opportunity, we led the cost segregation process, coordinating the engineering analysis needed to identify assets eligible for accelerated depreciation. The analysis evaluated building components, including lighting, wiring, plumbing and other systems, to identify qualifying assets.
Throughout the process, we translated technical findings into clear financial impact, helping the client understand opportunity and risk. This approach helped maximize available tax benefits while maintaining a disciplined approach to compliance amid changing depreciation rules.
Outcome
The cost segregation study helped the client improve near-term cash flow while strengthening its approach to future acquisitions. What made it work:
- Accelerated tax savings: Generated approximately $200,000 in tax savings through accelerated depreciation.
- Improved cash flow: Increased near-term cash flow and created greater flexibility for reinvestment.
- Expanded depreciation opportunities: Identified additional qualifying assets beyond standard depreciation schedules.
- Risk-aligned strategy: Balanced tax savings with the client’s risk tolerance.
| Company Information | |
|---|---|
| Industry | Real Estate |
| Headquarters | New York |
| Ownership Structure | Private Enterprise Organization |
| Geographic Footprint | Nationwide |
| Number of Employees | 200+ |
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