TAXES SAVED: $350,000

Engagement Overview:

Bedford Capital was engaged by the owner of a nursing home group to conduct a cost segregation study on one of their facilities. The goal was to identify assets that could be moved to shorter depreciation schedule and save the client taxes.

Property Overview:

This 2-story health care facility was acquired in 2001 for a total purchase cost of $2,811,130. The building has total interior space of approximately 57,084 sf. The facility was constructed in three distinct phases, and features forty oxygen-equipped patient rooms.

Engineering Process:

Our engineers examined all design and construction documents, depreciation schedules, and other related data to determine the cost basis for every component in the building. Next, our engineer conducted an on-site study to identify and photograph all assets that may qualify for accelerated depreciation.  Further, our team (site engineer, costing engineer and tax specialist) identified assets that qualify as ‘Specialized Use”, i.e. outside normal use of that property type.

Estimate of Benefits:

Our pre-engagement estimate showed a potential of $640,000 in assets that should be scheduled with shorter depreciable lives.  Our study resulted in a total of $1,101,435, or 39.2%, that qualified as 5 or 15 year property. Further, we reallocated the entire base building asset from 39 year property to 27.5 year property. As a result, the property owner saved over $350,000 in taxes for the current tax year.