Cost Segregation Studies in Louisiana
While Louisiana is known best for alligators and New Orleans, it has a strong economy based on shipping, manufacturing, entertainment, and tourism. With one of the busiest ports in the world, Louisiana is a vital link in the American trade system, as it sits at the mouth of the Mississippi River. With Shreveport, Lake Charles, Baton Rouge, and plenty of other prosperous cities outside of New Orleans, Louisiana has a diverse economy and a strong portfolio of commercial properties.
With so much trade and tourism, Louisiana has plenty of room for short-lived depreciation that can be targeted by cost segregation. Backed by the IRS, cost segregation is the only legal way to use accelerated depreciation to lower the burden of income taxes. This extends to all commercial properties, across all industries. It even includes features outside of buildings, such as lighting, parking lots, landscaping, and fencing. With frequent hurricanes and a humid climate, exterior components often depreciate at a greater rate in Louisiana than in other states.
Cost segregation can be the savior of any commercial property with a high income, though even small businesses can free up some cashflow by utilizing it correctly. The IRS has very strict rules that must be followed, ensuring that all methods are credible, all results are accurate, and all documentation is correct. O’Connor is here to be your guide to this complex strategy, with skilled appraisers that have done over 10,000 cost segregation reports across the world. Based in Houston, O’Connor is only a stone’s throw away from Louisiana. The following table shows just a few Louisiana commercial properties that were able to benefit from cost segregation.
Real Louisiana Properties Helped by O’Connor
| 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 | $27,625,000 | 01/01/15 | 2015 | $1,305,625 | $517,027 | 183.0:1 | $2,331,584 | 826.0:1 |
| Hotel | $7,623,316 | 10/01/15 | 2015 | $177,936 | $70,463 | 23.3:1 | $1,059,801 | 352.0:1 |
| Retail | $4,336,070 | 02/01/15 | 2015 | $105,208 | $41,662 | 14.7:1 | $223,088 | 79.6:1 |
| Multifamily | $5,877,420 | 01/01/07 | 2014 | $877,381 | $347,443 | 128.0:1 | N/A | N/A |
| Multifamily | $1,050,000 | 06/01/14 | 2014 | $40,788 | $16,152 | 15.7:1 | $69,544 | 68.7:1 |
Results
* Results from “Catch Up” studies which allow the owner of properties purchased in previous tax yearsto 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.