Property Overview
This case study analyzes a Senior Living Facility acquired in October 2020 for $9,740,000 (excluding land). The study was applied to the 2020 tax year, utilizing a 40% tax rate and an 8% present value rate of return.
With 100% bonus depreciation, the facility’s owners were able to maximize their upfront tax benefits, reducing taxable income and enhancing cash flow. The cost segregation study strategically categorized building components into shorter depreciation periods, creating significant tax savings opportunities.
| Property Type | Senior Living Facility |
| Purchase price(less land) | $9,740,000 |
| Building sqft | 93,058 |
| Entire site sqft | 111,266 |
| Data acquired | October 2020 |
| Tax year study applied | 2020 |
| Tax rate | 40.0% |
| 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 $702,987 in tax savings within the first year. Over a 10-year period, the net present value (NPV) of savings reached $538,133, while the total NPV over the remaining life of the property amounted to $417,365. When reinvested, these savings equate to a future value of $3,333,939.
Additionally, the study reallocated building components into accelerated depreciation categories, with $1,477,320 assigned to 5-year property, $293,570 to 15-year property, and $7,699,110 to 27.5-year property, allowing for substantial upfront deductions and improved cash flow.
Financial Benefits Achieved
| Immediate Tax Savings | $702,987 |
| NPV Over 10 Years | $538,133 |
| NPV Over Remaining Life of Property | $417,365 |
| Future Value of Invested Savings | $3,333,939 |