Auto Garage Cost Segregation

Maximize Your Auto Garage’s Tax Strategy

What is Cost Segregation
Cost segregation is an effective tax planning strategy that helps businesses and individuals involved in constructing, purchasing, expanding, or renovating real estate reduce their tax liabilities by accelerating depreciation deductions, which allows for the deferral of both federal and state income taxes.

Auto Garage Cost Segregation
For auto garages, to significantly reduce their tax liabilities. By accelerating depreciation deductions, property owners can defer both federal and state income taxes, improving cash flow and boosting financial performance. While auto garages may not have the same decorative elements as a dealership, they often feature specialized equipment, along with unique HVAC, plumbing, and electrical systems that qualify for shorter depreciation periods. This makes auto garages ideal candidates for cost segregation, enabling owners to maximize their tax savings and enhance the overall financial benefits of their property.

Practical Example

This case study highlights how accelerated depreciation can benefit auto garages with specialized infrastructure and equipment. By optimizing depreciation on assets like service bays, lifts, and tools, owners can reduce taxable income, improve cash flow, and enhance profitability. This strategy maximizes tax savings and boosts long-term financial performance.

Building information

○ Building Type 🡪 Auto Garage
○ Property Type: 🡪 Commercial
○ Building Size: 🡪 33,219 SF
○ Study Scope: 🡪 Acquisition
○ Condition: 🡪 Good
○ Filling Year: 🡪 2023
○ Date Placed in Service: 🡪 2018
○ Purchase Price less Land or Total Construction Cost: 🡪 $6,600,00
○ Tax Rate: 🡪 30%
○ Return on Investment Factor: 🡪 8%

Summary of Benefits

○ 25% Additional Tax Deductions in First Year: 🡪 $3,029,553

○ RNPV Over Remaining Life of Property: 🡪 $840,617

○ Net Present Value (NPV) Over 10 Years: 🡪 $891,832

Building Allocation After Study

5 Year Property

Depreciable Basis: $371,033 at 6%

7 Year Property

Depreciable Basis: $159,014 at 2%

15 Year Property

Depreciable Basis: $764,914 at 12%

39 Year Property

Depreciable Basis: $5,305,039 at 80%

Total

Depreciable Basis: $6,600,000 at 100%

At Leyton USA

We help companies unlock millions in funding through R&D tax credits, energy incentives, state, and local tax programs. Our experts partner with finance and executive teams to identify overlooked opportunities, improve cash flow, optimize tax positions to reinvest savings into innovation and sustainable growth.

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Auto Garage Cost Segregation Case Study