Golf Course Country Club Cost Segregation Case Study

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    • Jan 22, 2025
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country club cost segregation

Maximize Your Country Club 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. Discover country club cost segregation.

Country Club
For a golf course or country club, this approach can offer significant tax savings by applying accelerated depreciation to various property components, including land improvements such as trenching, sprinkler systems, tree cutting, parking lots, and landscaping. Additionally, decorative features and on-site amenities like restaurants can also be depreciated more quickly, further enhancing cash flow. The following case study demonstrates the advantages of accelerated depreciation for an apartment property, highlighting how similar benefits can be realized for golf course properties with complex infrastructure and recreational features. 

Practical Example

The following case study highlights the benefits of accelerated depreciation, demonstrating how similar advantages can be realized for golf course country clubs with extensive infrastructure and member-focused amenities. By optimizing the depreciation life of the golf course and its facilities for tax efficiency, these strategies can help reduce taxable income, enhance cash flow, and improve overall financial performance for country club owners and operators.

Building information

○ Building Type 🡪 Golf Course & Country Club
○ Property Type: 🡪 Commercial
○ Building Size: 🡪 5,079 SF
○ Study Scope: 🡪 Acquisition
○ Condition: 🡪 Good
○ Filling Year: 🡪 2023
○ Date Placed in Service: 🡪 2023
○ Purchase Price less Land or Total Construction Cost: 🡪 $2,995,000
○ Tax Rate: 🡪 30%
○ Return on Investment Factor: 🡪 8%

Summary of Benefits

○ 25% Additional Tax Deductions in First Year: 🡪 $1,130,565

○ RNPV Over Remaining Life of Property: 🡪 $287,623
○ Net Present Value (NPV) Over 10 Years: 🡪 $324,060

Building Allocation After Study

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    5 Year Property

    Depreciable Basis: $220,336 at 7%

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    7 Year Property

    Depreciable Basis: $55,084 at 2%

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    15 Year Property

    Depreciable Basis: $833,904 at 28%

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    39 Year Property

    Depreciable Basis: $1,885,676 at 63%

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    Total

    Depreciable Basis: $2,995,000 at 100%

Sales Tax Exemptions

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