Property Overview
This case study examines a funeral home property acquired in January 2017 for $1,600,000 (excluding land). The building spans 8,332 square feet, with an entire site footprint of 87,120 square feet. The cost segregation study was applied in the 2018 tax year, with a 30% tax rate and an 8% present value rate of return.
Unlike properties benefiting from bonus depreciation, this funeral home did not qualify for 100% bonus depreciation, making strategic asset reclassification through cost segregation essential for optimizing tax savings.
| Property Type | Funeral Home |
| Purchase price(less land) | $1,600,000 |
| Building sqft | 8,332 |
| Entire site sqft | 87,120 |
| Data acquired | January 2017 |
| Tax year study applied | 2018 |
| Tax rate | 30.0% |
| Present value rate of return | 8% |
| Bonus depreciation | 0% |
Building Allocation After Study
Cost Segregation Study Benefits
By conducting a cost segregation study, the funeral home secured a first-year tax savings of $39,864, with a 10-year NPV of $79,430 and a remaining property life NPV of $66,804. When reinvested, these tax savings translate into a future value of $1,244,250.
The study reallocated building components into accelerated depreciation categories, with $208,000 classified as 5-year property, $371,200 as 15-year property, and $1,020,800 remaining under 39-year property. These adjustments allowed the owner to front-load depreciation deductions, improving cash flow and reducing taxable income.
Financial Benefits Achieved
| Immediate Tax Savings | $39,864 |
| NPV Over 10 Years | $79,430 |
| NPV Over Remaining Life of Property | $66,804 |
| Future Value of Invested Savings | $1,244,250 |