Property Overview
This case study highlights a hotel property acquired in June 2020 for $9,400,000 (excluding land). The building spans 47,890 square feet, with an entire site footprint of 59,855 square feet. The study was applied to the 2020 tax year, with a tax rate of 37% and a present value rate of return of 8%.
The analysis ensures full utilization of available tax-saving strategies, with 100% bonus depreciation applied, maximizing the financial benefits for the property owner.
| Property Type | Hotel |
| Purchase price(less land) | $9,400,000 |
| Building sqft | 47,890 |
| Entire site sqft | 59,855 |
| Data acquired | June 2020 |
| Tax year study applied | 2020 |
| Tax rate | 37.0% |
| Present value rate of return | 8% |
| Bonus depreciation | 100% |
Building Allocation After Study
Cost Segregation Study Benefits
The cost segregation study provided significant tax savings for the hotel property, delivering an impressive $1,254,528 in tax savings within the first year. Over a 10-year period, the net present value (NPV) of savings reached $1,045,281, while the total NPV over the remaining life of the property amounted to $862,714. When reinvested, these savings equate to a future value of $15,499,472.
Additionally, the study reallocated building components into accelerated depreciation categories, with $2,519,200 assigned to 5-year property, $911,800 to 15-year property, and $5,969,000 to 39-year property, allowing for substantial upfront deductions and improved cash flow.
Financial Benefits Achieved
| Immediate Tax Savings | $1,254,528 |
| NPV Over 10 Years | $1,045,281 |
| NPV Over Remaining Life of Property | $862,714 |
| Future Value of Invested Savings | $15,499,472 |