Nelson Engineering Co.

Benefits of a Cost Segregation Study

  • Increased cash flow through tax benefits achieved from accelerated depreciation.
  • Increased net present value of tax savings achieved from accelerated depreciation.
  • Independent third-party analysis that will withstand Internal Revenue Service examination.

Example: A client purchased a professional building in 2007, at a total improvements value of $5,250,500 (excluding land). The client did not allocate any of their improvements into shorter depreciable tax lives and treated the entire $5,250,500 building as 39-year property.

The following charts shows the actual financial benefits derived from a Cost Segregation study completed in 2008.

Increased cash flow

tax benefits

Building Type Average Cost re-allocations to short-term Accelerated Depreciation
Apartment Buildings 20 to 45 %
Retail Stores 20 to 40 %
Restaurants 20 to 45 %
Office Buildings 10 to 25 %
Manufacturing Facilities 20 to 60 %
Research and Development 30 to 60 %
Wineries 20 to 45 %
Grocery Stores 25 to 45 %
Hotels 25 to 45 %
Warehousing 10 to 25 %
Other projects that qualify are:
Shopping malls Healthcare facilities
Airports Medical Centers
Sports facilities Industrial Buildings
Golf courses & ranges Distribution centers
Resorts And more