McGuire Sponsel was engaged to perform a cost segregation study on a $3.2 million self-storage facility built in Central Ohio.
Prior to the study the owner planned on capitalizing the entire construction budget as real property and depreciating over 39-years. McGuire Sponsel was engaged to optimize the classifications based on the available MACRS classifications.
McGuire Sponsel’s team quickly completed a site inspection and gathered the construction blueprints, invoices, and other documentation. A detailed engineering-based study was then completed. Based on the detailed physical inspection and subsequent calculations our report was able to successfully reclassify over 31 percent of the construction costs into 5 and 15-year property.
Based on our study the taxpayer was able to see increased first-year deductions of over $560,000. This generated a first year increased cash flow in excess of $220,000 with a net present value of cash flows over the life of the investment exceeding $210,000.