Projects

Healthcare

Assisted Living

Engagement Overview:

Bedford was engaged by the owners of an assisted living facility to conduct a cost segregation study for one of their properties. The objective of the study was to identify assets that could be moved to shorter recovery periods in order to accelerate depreciation and defer taxes.

Property Overview:

The portion of the property under review has a total gross area of 59,540 square feet with a building footprint of approximately 13,000 square feet all located on the 1.37 acre site. The property supports a total of 30 beds, with a mix of six private suites and 12 double suites. The building includes kitchen and laundry facilities. The facility was placed in service in July 1999 and has a cost basis of $1,190,775.

Engineering Process:

Our engineers examined all the design and construction documents, contractor payment requisitions and other related data to determine the cost basis for every component of the building. Next, our engineer conducted an onsite study to identify, measure, quantify and photograph the existence of all assets eligible for accelerated depreciation. Finally, our team (onsite engineer, senior engineer and tax specialist) reviewed the cost segregation study and certified its completeness and accuracy.

Estimate of Benefits & Savings:

The pre-engagement estimate we provided to the owners showed a potential reallocation of $316,689 or 30% to shorter depreciable lives. The projected tax benefit was $73,636 in NPV savings over the next 10 years with $77,964 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $513,215 or 43.1% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $120,328 in NPV savings over the next 10 years with $130,064 in tax savings available for the current tax year.