Cost Segregation Services for Shopping Centers?
While the interior of a shopping center is loaded with short-life depreciation components, the true goldmine is in the exterior. Landscaping, parking garages, parking lots, signage, outdoor displays, and countless other aspects are ripe sources for depreciation which can be used to reduce income taxes.
O’Connor’s cost segregation studies comply with all IRS mandated rules on evidence, methods, and lifetime accounting of assets. The focus is not only on short-term depreciation of property but is expanded to long-term sources like the buildings themselves. O’Connor will work tirelessly to paint the perfect picture for the IRS.
While cost segregation is beneficial to most commercial properties, studies often pay back their cost by a ratio of 9-1 when it comes to shopping centers. In some cases, this can be enlarged to ratios such as 70-1, if there is significant catch-up depreciation that can be applied. Look at the table below to see several real-life examples of shopping centers that O’Connor was able to help.
Sample Studies of Shopping Centers
| 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 |
|---|---|---|---|---|---|---|---|
| $1,398,779 | 04/01/12 | 2014 | $183,485 | $69,640* | 23.2:1 | $103,652* | 34.6:1 |
| $1,400,000 | 05/01/14 | 2015 | $109,089 | $42,032 | 14.0:1 | $87,249* | 29.1:1 |
| $1,920,000 | 05/01/15 | 2015 | $77,224 | $28,107 | 9.4:1 | $138,173 | 46.1:1 |
| $19,076,394 | 04/01/15 | 2015 | $846,511 | $332,078 | 73.8:1 | $1,534,666 | 341.0:1 |
| $1,760,550 | 09/01/14 | 2014 | $84,184 | $30,166 | 10.1:1 | $135,511 | 45.2:1 |
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.
