Hybrid Office and Warehouse Facility

Approach & Results

Client Profile

A CPA firm engaged McGuire Sponsel to conduct a cost segregation study for a recently constructed hybrid single-tenant office and warehouse building in Columbia, South Carolina. The client’s $2.28 million project was designed to meet the evolving needs of modern businesses, combining administrative space with efficient storage and distribution capabilities.

Process

Our Fixed Assets team was brought in to perform a comprehensive cost segregation study on this newly constructed hybrid facility. The engagement began on January 8, 2024, several months after construction was completed, allowing for a thorough analysis of the finished structure and its various components.

Our team conducted an intensive on-site evaluation on January 18, 2024. This detailed inspection, coupled with an exhaustive review of construction documents and final pay applications, enabled our team to identify numerous opportunities for strategic asset reclassification, optimizing the tax benefits for this custom-built property.

Study Results

The cost segregation study was finalized on February 16, 2024, resulting in over 24% of the depreciable basis being successfully reclassified from the standard 39-year property into more advantageous 5- and 15-year categories. This reclassification encompassed personal property assets totaling more than $548,000, all of which qualified for bonus depreciation.

This strategic asset categorization generated substantial financial benefits. The study produced an increased first-year cash flow exceeding $163,000, surpassing the initial projection by over $71,000. Moreover, the net present value of cash flows over the investment’s lifespan was calculated to exceed $116,000.