Case 6

Scenario

A property owner of a Class A office complex purchased a 100,000 sq. ft. building for $15 million.

Objective

Maximize depreciation deductions and reduce tax liabilities in the first few years of ownership.

Solution

A detailed cost segregation study identified $3.5 million in personal property components, including carpeting, lighting, and HVAC systems, which could be depreciated over 5, 7, and 15 years.

Result

The study accelerated depreciation and provided an immediate tax savings of around $1.2 million in the first year. The owner could deduct larger portions of the property’s costs upfront, reducing taxable income substantially during the first few years of ownership.