Whitepaper

Real Estate Tax Optimization
22 January 2025

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2 min read

Gas Station Cost Segregation Case Study

Research & Insights

Gas Station Cost Segregation Case Study

2025 Edition

Maximize Your Gas Stations 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. Gas Station Cost Segregation

Gas Station With Convenience Store
For gas stations with convenience stores, this strategy can be particularly beneficial, as many elements of the property—such as the building itself, signage, and retail fixtures, can be categorized as personal property eligible for accelerated depreciation. Like car washes, where the structure often functions as equipment, gas stations and convenience stores feature numerous removable and decorative items that can be depreciated more quickly, providing substantial tax savings for the business owner. Gas Station Cost Segregation

Practical Example

The following case study highlights the benefits of accelerated depreciation, demonstrating how similar advantages can be realized for gas stations with specialized infrastructure and customer-oriented services. By optimizing the gas station depreciation life for tax efficiency, these strategies can help reduce taxable income, improve cash flow, and enhance overall financial performance for gas station owners and operators.

Building information

Building Type 🡪 Gas Station with Convenience Store
Property Type: 🡪 Commercial
Building Size: 🡪 7,054 SF
Study Scope: 🡪 New Build
Condition: 🡪 New
Filling Year: 🡪 2023
Date Placed in Service: 🡪 2023
Purchase Price less Land or Total Construction Cost: 🡪 $3,000,000
Tax Rate: 🡪 30%
Return on Investment Factor: 🡪 8%

Summary of Benefits

25% Additional Tax Deductions in First Year: 🡪 $2,108,468

RNPV Over Remaining Life of Property: 🡪 $547,378

Net Present Value (NPV) Over 10 Years: 🡪 $618,088

At Leyton USA

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