TAXES SAVED: $264,000*

Engagement Overview:

Bedford Capital was engaged by a consulting firm to conduct a Cost Segregation Study of a self storage facility placed in service seven years prior to the engagement date. The objective was to identify assets that could be moved to shorter recovery periods in order to accelerate depreciation and defer taxes.

Property Overview:

This 1-story facility was constructed and placed into service in January 1999 with a total depreciable cost basis of $2.1 million. The facility consists of 584 storage units on four acres of land.

Engineering Process:

Our engineers examined all design and construction documents, contractor payment applications and other related data to determine the cost basis for every component in the building. Next, our engineer conducted an on-site inspection to identify and photograph all assets eligible for accelerated depreciation. Our team (on-site engineer, senior engineer, and tax specialist) reviewed the cost segregation study and certified its completeness and accuracy.

Estimate of Benefits:

The pre-engagement estimate we provided to the consulting firm showed a potential reallocation of $840,000 or 40% to shorter recovery periods. The projected tax benefit was $181,000 in current year savings with $192,000 in Net Present Value tax savings over the next 10 years. Results: Our study resulted in a total of $1 million or 49.9% being rescheduled to 5 and 15- year property. As a result, the property owner will save $321,000 in current year tax payments and realize over $264,000 in 10-year Net Present Value tax savings.

* represents the 10-yr. net present value savings – using an 8% discount rate.