February 26, 2016

Real Estate Developer Benefits From More Than $8 Million in Tax Savings (case study)

Client Profile

Annual Revenue: $165 million
Industry: Real Estate
Geographic Footprint: New York and Washington D.C. metro areas
Ownership Structure: Holding company composed of family-owned partnerships

CBIZ provides tangible property regulation analysis and cost segregation studies.Issue

A real estate developer reached the end of its second renovation in two years. At the same time, it was also finalizing the acquisition of a property that underwent building updates. CBIZ identified that all three projects presented opportunities to accelerate some of the developer’s renovation expenses.


By examining the developer’s tax filings, depreciation schedules and building plans, our team separated the assets that must be depreciated over 27.5 or 39 years as part of the building’s costs from those that could be placed into shorter 5, 7 and 15-year lives. One significant asset that had been depreciated over a long life qualified for a shorter one, which allowed for a catch-up of depreciation expense that hadn’t previously been claimed.

Our team also considered what the real estate developer renovated, which allowed for benefits on top of those identified by the cost segregation study. The developer’s updates to its building’s lighting, plumbing, windows and HVAC systems qualified as repairs under the recently enacted tangible property regulations.


The cost segregation studies and the evaluation of the tangible property regulations on the three renovation projects allowed the developer to accelerate several development-related expenses and significantly reduce its current year tax liability. The cumulative present value of the tax savings to the client exceeds $8 million.

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Copyright © 2016, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

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