Client Snapshot
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Building Type
Shopping Center
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Location
Antioch, CA
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Study
Cost Segregation
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Project Objective
Asset Reclassification
Approach & Results
Client Profile
A CPA firm contacted McGuire Sponsel to conduct a cost segregation study for their client, who purchased a shopping center in Antioch, California, for approximately $24.7 million.
Process
Our team was engaged to perform the cost segregation study shortly after the building’s purchase. Our Fixed Assets team conducted an extensive site visit, examining the property in detail and analyzing all relevant documentation. This approach allowed for the precise identification and reclassification of personal property assets into shorter depreciation categories.
Study Results
Our Fixed Assets team successfully reclassified over 30% 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 $5.6 million of the total project cost.
As a result of this reclassification, the study yielded an increased first-year cash flow of over $2,058,258 for the client, surpassing the original projection by more than $615,000. Furthermore, the net present value of cash flows over the life of the investment exceeded $1,305,482.
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$1,305,482
Net Present Value