Cost Segregation Studies in New York City
New York truly needs no introduction. The most populated city in the United States, New York City has over 8.5 million residents, the centerpiece of a metropolitan area of over 23 million individuals. The industries and businesses that can be found in NYC are legion, with finance, entertainment, shipping, international trade, and the arts only being a drop in the bucket. The land in New York City is some of the most valuable on the planet, with rents to match.
The very nature of New York City makes it the perfect place to deploy cost segregation. With historical buildings, constant renovation, and some of the most expensive construction projects ever done, commercial property in New York has no shortage of depreciation opportunities. Short-life depreciation can benefit newer buildings and renovated ones, using components that have a life of five, seven, or 15 years to help reduce income taxes. It is estimated that the real estate of NYC is worth a total of $1 trillion.
With so much potential value to use, you will want an expert to lead your cost segregation efforts. O’Connor is here to help. Not only do we have a New York office, but we have appraisers across the nation that know the ins-and-outs of all property types. Our appraisers can also prepare a report that the IRS will be happy with, utilizing credible methods, results, and documentation. The following table features a few New York commercial properties that O’Connor has been able to help in the past few years.
Real Results for New York Cost Segregation
| 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 | $8,546,000 | 02/01/16 | 2016 | $434,945 | $172,238 | 81.5:1 | $765,034 | 363.0:1 |
| Multifamily | $6,471,000 | 02/01/16 | 2016 | $297,126 | $117,662 | 55.7:1 | $533,078 | 253.0:1 |
| Office | $17,878,184 | 07/01/15 | 2015 | $876,577 | $347,125 | 115.0:1 | $1,422,801 | 472.0:1 |
| Multifamily | $18,864,000 | 02/01/16 | 2016 | $838,586 | $332,080 | 137.0:1 | $1,514,634 | 628.0:1 |
| Hotel | $4,280,440 | 10/01/13 | 2014 | $424,465 | $168,088 | 64.0:1 | $286,759 | 110.0:1 |
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.
** 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.
