Cost Segregation for Nursing Homes, Assisted Living, and Skilled Nursing
Nursing homes and assisted living centers are a combination of apartments and medical offices when it comes to cost segregation. Short-term deprecation can be found in not only the rooms themselves, but in common areas, kitchens, dining areas, and medical areas. This includes furniture, medical devices, fixtures, and other real property.
The exterior of such facilities is also a great source of depreciation. Parking areas, landscaping, exercise areas, gardens, and more are all useful in lowering your income taxes. When O’Connor launches a cost segregation study, all of these components will be discovered, cataloged, and valued according to stringent IRS rules.
Due to the hybrid nature of assisted living or nursing facilities, the payback for a cost segregation study can be immense, even up to an ROI of 50-1. This can be raised thanks to things like bonus or catch-up depreciation. Take note of the table below, which features other businesses that have been helped by O’Connor.
Sample of Actual 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 |
|---|---|---|---|---|---|---|---|
| $9,469,248 | 6/1/2013 | 2013 | $386,072 | $152,884 | 45.2:1 | $683,132 | 203.0:1 |
| $7,484,466 | 10/1/2011 | 2011 | $60,009 | $21,003 | 6.5:1 | $372,105 | 117.0:1 |
| $23,544,000 | 2/1/2015 | 2015 | $560,290 | $221,875 | 81.6:1 | $1,053,215 | 388.0:1 |
| $12,562,885 | 6/1/2015 | 2015 | $404,799 | $157,871 | 51.8:1 | $678,986 | 224.0:1 |
| $4,989,211 | 9/1/2014 | 2014 | $173,981 | $67,853 | 22.2:1 | $272,969 | 90.5:1 |
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.