Cost Segregation Studies for Pennsylvania
Pennsylvania is one of the oldest states in America, with a longstanding tradition of hard work and commerce. Known for fanatical sports fans, Wawa stores, and history, Pennsylvania is both a glimpse of America’s past and its future. Philadelphia is one of the nation’s most populated metropolitan areas, with a diverse community and economy. Pittsburgh is still known as the “Steel City” but the steel mills have been replaced with biotech, finance, and technology. There is still plenty of manufacturing across Pennsylvania, with more being added every year. Much of Pennsylvania, outside the major cities, is dedicated to agriculture.
Because of its multi-faceted nature, Pennsylvania is an outstanding place to deploy cost segregation. With newer construction and heavy renovation taking over the area, there has never been a better time to utilize short-life and long-term depreciation to lower income taxes. Industrial buildings provide a lot of short-life depreciation due to heavy equipment, while office space has plentiful common areas, furnishings, and more. Even parking lots, exterior lighting, and fencing can be used. Virtually any commercial property that brings in income is ideal for cost segregation.
Cost segregation is a great way to reduce taxes and open up cashflow. This can be difficult to achieve by yourself, as the IRS has strict policies about methods, results, and documentation. O’Connor is here to help with expert appraisers and research teams. We can send out an agent for a site visit, or you can compile evidence and work with one of our appraisers remotely. Cost segregation can pay for itself many times over in just one year. Take a look at the following table to see some real results we have achieved for clients.
Cost Segregation Results for Pennsylvania
| 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 |
|---|---|---|---|---|---|---|---|---|
| Multifamily | $17,512,466 | 01/01/15 | 2015 | $707,721 | $280,258 | 124.0:1 | $1,278,699 | 566.0:1 |
| Multifamily | $16,646,210 | 08/01/14 | 2014 | $759,625 | $300,811 | 117.0:1 | $1,220,226 | 476.0:1 |
| Multifamily | $24,980,401 | 04/01/13 | 2015 | $2,280,218 | $902,966 | 299.0:1 | $1,155,475 | 379.0:1 |
| Multifamily | $23,865,972 | 10/01/14 | 2014 | $227,607 | $87,415 | 33.2:1 | $1,583,074 | 583.0:1 |
| Medical Office | $1,354,672 | 01/01/15 | 2015 | $209,270 | $82,871 | 46.1:1 | $91,113 | 51.7:1 |
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.