Client Profile
McGuire Sponsel was contacted to perform a cost segregation depreciation analysis for a 320-unit multifamily residential rental complex. The investment totaled more than $27 million inclusive of land value. Our cost segregation study resulted in $1.7 million in increased cash flow over the first year.
The Challenge
McGuire Sponsel’s experienced professionals applied their knowledge of engineering, construction, and architectural design, along with a thorough understanding of the IRS depreciation guidelines, to complete a cost segregation analysis of the property the same tax year it was capitalized. Our professionals completed a detailed site inspection and reviewed significant property documentation. The deliverable report included detailed documentation and calculations for each asset and cited tax law to support all asset classifications.
Study Results
Reclassification of assets resulting from our study yielded $3 million of land improvement property with a fifteen-year life and $4 million of personal property with a five-year life. The accelerated depreciation generated $1.7 million in first year increased cash flow and net present value of $1.3 million in cumulative tax deferral over the life of the investment.