{"id":26174,"date":"2025-01-13T15:42:11","date_gmt":"2025-01-13T15:42:11","guid":{"rendered":"https:\/\/leyton.com\/us\/?post_type=white_paper&p=26174"},"modified":"2025-01-22T19:06:31","modified_gmt":"2025-01-22T19:06:31","slug":"cost-segregation-case-study-hotel","status":"publish","type":"white_paper","link":"https:\/\/leyton.com\/us\/insights\/white-papers\/cost-segregation-case-study-hotel\/","title":{"rendered":"Cost Segregation Case Study \u2013 Hotel"},"content":{"rendered":"
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Maximize Your Hotel’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.

Hotels<\/mark><\/strong>
For hotels, this strategy can be especially advantageous, as it allows for the accelerated depreciation of various property components, including decorative elements, furnishings, and specialized equipment, all of which can be depreciated over a shorter period than the hotel\u2019s standard depreciation. The hotel depreciation life is significantly shorter for these components than the overall structure, providing immediate tax relief and improving cash flow.<\/strong> By identifying these assets and depreciating them over shorter timeframes, hotel owners can greatly lower their tax burden.\u00a0
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Practical Example <\/h2>\n <\/div>\n
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The following case study<\/strong> highlights the benefits of accelerated depreciation, demonstrating how similar advantages can be realized for hotels with complex infrastructure and guest-focused amenities, ultimately optimizing the hotel depreciation life for tax efficiency.<\/p>\n <\/div>\n <\/div>\n

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

\u25cb <\/strong><\/mark>Building Type<\/strong> \ud83e\udc6a <\/mark>Hotel
\u25cb <\/strong><\/mark>Property Type:<\/strong> \ud83e\udc6a <\/mark> Commercial
\u25cb <\/strong><\/mark>Building Size:<\/strong> \ud83e\udc6a <\/mark> 54,916 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> 2022
\u25cb<\/strong><\/mark> Purchase Price less Land or Total Construction Cost:<\/strong> \ud83e\udc6a <\/mark> $90,000,000
\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>$58,252,486

\u25cb<\/mark> RNPV Over Remaining Life of Property<\/strong>: \ud83e\udc6a <\/mark> $15,143,298

\u25cb<\/strong><\/mark> <\/em>Net Present Value (NPV) Over 10 Years:<\/strong> \ud83e\udc6a<\/mark> $16,248,429<\/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