Cost Segregation Studies for Tennessee
Resting between the Mississippi River and the Appalachian Mountains, Tennessee is a beautiful state that is friendly to tourists and businesses. The Volunteer State is a cosmopolitan mix of wilderness, urban culture, and rural charm. Memphis and Nashville are both centers of commerce and music, especially Blues and Country, respectively. Many corporations have made their headquarters in Tennessee due to friendly tax breaks. Medical, agriculture, music, tourism, and entertainment form the basis of Tennessee’s robust economy.
Nashville, Memphis, Murfreesboro, Jackson, and Knoxville are just a few of the cities that can benefit from cost segregation, but even a business in an isolated mountain town can see a big increase in cashflow by using this service. Short-life and long-term depreciation of commercial properties can be used to shield property owners from income taxes, potentially giving an ROI of 5-1 or even 70-1. Modifiers such as bonus and catch-up depreciation can make cost segregation the best tax-cutting mechanic available.
Depreciation in Tennessee can be found in both external and internal sources. External sources include fencing, landscaping, parking, and lighting, while internal components include plumbing, carpeting, fixtures, heavy machinery, and appliances. We at O’Connor have made Tennessee one of our primary targets for cost segregation and our expert appraisers spend a good bit of their time there. Our experts know how to get the most savings, while also meeting IRS requirements for credible methods, results, and documentation. With over 10,000 cost segregation reports to their name, our appraisers have the experience to help you and your business, just as they did for the owners of the properties contained in the following table.
Real Tennessee Cost Segregation Results
| Asset Type | Depreciable Basis | Purchase Date | Year of Study | 1st Year Additional Depreciation | 1st Year Tax Savings | Year 1 Payback | Initial 5 Years Tax Savings | 5 Year Payback |
|---|---|---|---|---|---|---|---|---|
| Warehouse | $10,762,660 | 04/01/16 | 2016 | $524,247 | $207,602 | 62.5:1 | $947,536 | 286.0:1 |
| Medical Office | $598,223 | 12/01/15 | 2015 | $122,786 | $48,623 | 27.1:1 | $54,617 | 31.4:1 |
| Retail | $1,638,672 | 04/01/11 | 2015 | $274,020 | $108,512 | 46.1:1 | $126,020 | 472.0:1 |
| Office Building | $21,009,780 | 06/01/15 | 2015 | $747,565 | $296,036 | 89.1:1 | $1,318,320 | 398.0:1 |
| Self Storage | $4,407,438 | 05/01/15 | 2015 | $197,789 | $78,324 | 28.8:1 | $351,482 | 130.0:1 |
Results
* 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.
** Mid-Quarter depreciation convention utilized due to purchase date.
***Results include bonus depreciation first year calculations.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.