Houston, TX Cost Segregation
Houston is currently the fourth-most populated city in the United States and is continuing to grow. A paragon of industry and culture, H-Town is known for the energy business, but is also a leader in the arts, medicine, engineering, and the biotech industry. Houston and its many suburbs are also known for sprawl, encompassing several counties. All of this makes Houston a perfect candidate for cost segregation.
Cost segregation allows the owner of a commercial property to use accelerated depreciation to lower their income taxes. This is the only such method approved by the IRS, and there are specific ways that this cost-saving measure must be used. Thankfully, Houston’s own O’Connor are masters of this craft.
With over 50 years of service in fighting property taxes, O’Connor is a Houston-based firm that does cost segregation across the globe. As one of the pioneers of cost segregation, O’Connor has the expertise needed to get a property owner every cent in depreciation they have, reducing income taxes or even eliminating them entirely in the first year. The table below shows only a few of the over 10,000 cost segregation studies that O’Connor has successfully done for clients.
Successful Cost Segregation Studies in Houston
| 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 | $9,900,000 | 12/01/15 | 2015 | $140,254 | $55,541 | 19.9:1 | $808,860 | 290.0:1 |
| Green Office | $4,356,600 | 09/01/15 | 2015 | $82,153 | $32,533 | 7.3:1 | $147,714 | 34.0:1 |
| Retail | $2,800,000 | 04/01/15 | 2015 | $117,060 | $46,356 | 17.1:1 | $213,077 | 79.4:1 |
| Hotel | $2,566,500 | 11/01/12 | 2015 | $492,635 | $195,084 | 58.7:1 | $239,091 | 72.7:1 |
| Multifamily | $17,245,422 | 09/01/15 | 2015 | $944,809 | $374,144 | 127.0:1 | $1,487,650 | 506.0:1 |
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. to benefit from cost segregation in the current tax year without filing amended returns.
** Mid-Quarter depreciation convention utilized due to purchase date.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.
