Cost segregation study finds tax savings for senior care facilities
If your senior care facility has purchased, renovated, or constructed property in the last 15 years, you should consider a cost segregation study. Cost segregation often offers the opportunity for considerable tax savings.
Cost segregation study helps senior care facility save $225,000
For instance, a senior care provider had our tax consultants do a cost segregation study on its new facility costing $2,740,000, excluding land. Our multidisciplinary cost segregation team was able to allocate $850,000 to short-lived property. Examples of the reclassified items were land improvements, patient-nurse call equipment, a backup power system, cabinetry, and accent lighting.
The result was a cash flow increase of $278,000 in the first five years with a net present value savings of $225,000.
The ideal time for a cost segregation study depends on your tax situation. It can be:
- Post-purchase, Remodel, or Construction — IRS Form 3115, Application for Change in Accounting Method, makes it easy to go back and claim missed depreciation on assets acquired as far back as 1987 without amending prior tax returns.
- Year Placed in Service — The optimum time is during the year a building is being constructed, purchased, or remodeled. This allows the owner to immediately optimize tax savings and accurately classify assets.
How does cost segregation work?
Without cost segregation, building components are depreciated over 39 years. Cost segregation identifies personal property that can be depreciated over a variety of shorter recovery periods utilizing accelerated depreciation methods.
You will appreciate our expertise and thoroughness
Our cost segregation consulting team includes accountants, engineers, and attorneys. They have the experience and skills to help you identify and document the shorter-lived assets in your project. They also know the judicial decisions, IRS rulings, regulations, and interpretations that make cost segregation studies complex.
Our hope is that you will appreciate the bottom line savings created by our expertise and thoroughness.
We offer a proven methodology
Plante & Moran has a three-stage approach to cost segregation analysis. Members of our cost segregation team begin by interviewing you so that they can understand your organization’s scope of capital investments, and then tax specialists estimate your cost segregation benefit to help you decide whether cost segregation is right for you.
If you decide to move forward, the cost segregation consultants will visit your site and gather relevant data and documents. Our tax specialists will use the information to conduct an engineering and tax analysis and prepare your report.
In the final phase, the cost segregation team will review the report with you, prepare any necessary tax compliance forms (Form 3115 — Application for Change in Accounting Method), and deliver the final study.
Do you have hidden value in your facility? Call us and we can help you find the answer with a comprehensive cost segregation analysis.
Cost segregation is another way Plante & Moran tax specialists help organizations thrive.