Multi-Tenant Office Building

Approach & Results

Client Profile
A CPA firm engaged McGuire Sponsel to carry out a cost segregation study for a recently acquired multi-tenant office building in Greenwood, Indiana, for $3.1 million.

Process
The process commenced shortly after the building’s acquisition on July 28, 2022, with the engagement letter signed on August 23, 2022. Our Fixed Assets team conducted a comprehensive site visit on October 26, 2022, meticulously examining the property and reviewing all relevant documentation. This thorough approach allowed for precise identification and reclassification of assets into shorter depreciation categories.

Study Results
The cost segregation study was finalized on November 30, 2022, delivering exceptional results for our client. Our team successfully reclassified over 26% of the depreciable basis from 39-year property into 5- and 15-year property. These personal property assets, all eligible for bonus depreciation, accounted for over $580,000 of the total project cost. As a result of this reclassification, the study yielded an increased first-year cash flow of over $211,000 for the client, surpassing the original projection by more than $67,000. Furthermore, the net present value of cash flows over the life of the investment exceeded $134,000.