Cost Segregation: Multifamily Case Study

Investors Benefit From 100% Bonus Depreciation

ELB Consulting was engaged to conduct its “fully engineered and accounted” cost segregation study on this multifamily property, so the investors can benefit from 100% bonus depreciation.

Without Cost Segregation Benefits

Assuming straight-line depreciation, this project would provide $890,182 per year in deductions over the next 27.5 years. That is helpful but will not mitigate much tax liability.

Using Cost Segregation as a Tax Strategy

Cost segregation is a method of reclassifying certain building components into a shorter life-class. This study reclassified $10,330,374 in short-life assets. With 100% bonus depreciation, this can all be taken in the first year.

Net Cash Benefit of this study is $3,822,238 (assuming a 37% tax bracket).

That’s real money that can be invested in more real estate properties to help simulate the economy.

ADJUSTED ASSET CLASS LIFE	% Re-classified	$ Amount
Accelerated Depreciation (5, 7 & 15 year)	37%	$10,330,374.08
27.5 year property	63%	$17,209,625.92
Total Property Depreciation Basis	100%	$27,540,000.00

Having forensic fixed asset management detail for all property components allows for future expenses in the future. This happens through the retirement and disposition of assets through property renovations, repairs, and maintenance.

Experience and Methodology Matter

Since 2002, ELB Consulting has led the industry with the most forensic cost segregation studies in the industry. Our proprietary engineering approach provides complete asset detail, while other firms use a residual, sampling or modeling approach. These approaches are far less engineered and leave your money on the table.

ELB’s unique methodology and attention to detail maximizes tax benefits and delivers a bulletproof study in the event of an IRS audit.