{"id":25695,"date":"2025-01-24T13:03:43","date_gmt":"2025-01-24T13:03:43","guid":{"rendered":"https:\/\/leyton.com\/us\/?post_type=white_paper&p=25695"},"modified":"2025-01-24T13:03:44","modified_gmt":"2025-01-24T13:03:44","slug":"warehouse-cost-segregation-case-study","status":"publish","type":"white_paper","link":"https:\/\/leyton.com\/us\/insights\/white-papers\/warehouse-cost-segregation-case-study\/","title":{"rendered":"Warehouse Cost Segregation Case Study \u00a0\u00a0"},"content":{"rendered":"
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Maximize Your Warehouse or Industrial Building’s<\/mark><\/strong> Tax Strategy <\/h2>\n \n \n

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

Warehouse or Industrial<\/mark><\/strong>
While warehouses may not have as many visible assets compared to other sectors, they can still benefit from cost segregation, especially if they house manufacturing or distribution operations. By identifying and classifying components such as specialized equipment, racking systems, and distinct building features, owners can maximize their tax benefits and improve the financial performance of their industrial investments.\u00a0
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Practical Example <\/h2>\n <\/div>\n
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The following case study highlights the benefits of accelerated depreciation, demonstrating how similar advantages can be realized for warehouses with specialized infrastructure and operational systems. By optimizing the depreciation life of assets like shelving, loading docks, and HVAC systems for tax efficiency, warehouse owners can reduce taxable income, improve cash flow, and enhance the overall financial performance of the property.<\/p>\n <\/div>\n <\/div>\n

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Building information <\/mark><\/h3>\n

\u25cb <\/strong><\/mark>Building Type<\/strong> \ud83e\udc6a <\/mark>Warehouse or Industrial
\u25cb <\/strong><\/mark>Property Type:<\/strong> \ud83e\udc6a <\/mark> Commercial
\u25cb <\/strong><\/mark>Building Size:<\/strong> \ud83e\udc6a <\/mark> 639,595 SF
\u25cb<\/strong><\/mark> Study Scope:<\/em><\/strong> \ud83e\udc6a <\/mark>New Build
\u25cb<\/strong><\/mark> Condition<\/strong>: \ud83e\udc6a <\/mark>New
\u25cb<\/strong><\/mark> Filling Year:<\/strong> \ud83e\udc6a <\/mark> 2023
\u25cb<\/strong><\/mark> Date Placed in Service:<\/strong> \ud83e\udc6a <\/mark> 2018
\u25cb<\/strong><\/mark> Purchase Price less Land or Total Construction Cost:<\/strong> \ud83e\udc6a <\/mark> $16,073,600
\u25cb<\/strong><\/mark> Tax Rate:<\/strong> \ud83e\udc6a <\/mark> 30%
\u25cb<\/strong><\/mark> Return on Investment Factor:<\/strong> \ud83e\udc6a <\/mark> 8%<\/p>\n <\/div>\n

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Summary of Benefits<\/mark><\/h3>\n

\u25cb<\/mark> 25% Additional Tax Deductions in First Year:<\/strong> \ud83e\udc6a <\/mark>$7,193,284

\u25cb<\/mark> RNPV Over Remaining Life of Property<\/strong>: \ud83e\udc6a <\/mark> $2,161,743

\u25cb<\/strong><\/mark> <\/em>Net Present Value (NPV) Over 10 Years:<\/strong> \ud83e\udc6a<\/mark> $2,248,612<\/p>\n <\/div>\n <\/div>\n\n <\/div>\n<\/section>\n\n

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Building Allocation After Study <\/span>\n <\/h2>\n <\/div>\n