Cost Segregation Studies for Daycare and Private Schools
Both private schools and daycare centers are hotbeds of short-life depreciation that can be utilized in cost segregation. While classrooms are the most obvious sources for this, perhaps even more can be found in common areas or high-dollar places like kitchens. The possible savings for the interior of such facilities may be dwarfed by those on the outside.
The exterior provides some major sources of depreciation, including landscaping, parking areas, playgrounds, sports fields, and other outdoor equipment. A cost segregation study by O’Connor can help find all of these components, and more, while sticking to the rules mandated by the IRS.
Daycares and private schools can land a property owner giant savings on their income taxes via cost segregation. A study could see a return on investment of 20-1 or more. Certain factors or years of unused depreciation could push this amount of savings even higher. Please consult the table below to see many real cases that O’Connor was able to handle to see what you can expect for your own study.
Sample Study Results
| Depreciable Basis | Purchase price | Purchase Date | Year of Study | 1st Year Tax Savings | Year 1 Payback | Initial 5 Years Tax Savings | 5 Year Payback |
|---|---|---|---|---|---|---|---|
| $11,766,236 | 7/1/2015 | 2015 | $223,895 | $88,663 | 29.7:1 | $437,476 | 147.0:1 |
| $4,964,198 | 8/1/2015 | 2015 | $128,157 | $50,750 | 17.0:1 | $239,612 | 81.1:1 |
| $15,983,702 | 8/1/2015 | 2015 | $376,025 | $148,906 | 49.8:1 | $737,813 | 248.0:1 |
| $1,591,175 | 9/1/2015 | 2015 | $56,939 | $22,206 | 7.3:1 | $92,421 | 31.3:1 |
| $11,166,715 | 8/1/2015 | 2015 | $184,206 | $72,946 | 26.8:1 | $301,079 | 112.0:1 |
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.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.