Projects

Hospitality

Resort

Engagement Overview:

Bedford was engaged by a national owner/operator of upscale resorts and hotels to conduct a cost segregation study on their recently renovated seaside resort. The objective was to identify assets eligible for tax credits as well as those that could be moved to shorter depreciable lives and thereby save taxes.

Property Overview:

This 4-story “grand old hotel complex” was built in 1874. Prior to acquisition by our client, the property had been condemned and remained vacant for more than 21 years. Our client acquired the property in 1997 and began significant renovations and additions of two building wings. A portion of the renovation costs were eligible for Historic Renovation Credits. Additionally, a major portion of the building wing construction was eligible for bonus depreciation. The property has a total depreciable cost basis of $30,097,042 and contains a total of 179,000 square feet.

Engineering Process:

Prior to the mobilization of our field engineers, a significant amount of time was spent with the client’s accounting and construction departments to establish baseline project cost data eligible for applicable tax credits, bonus depreciation and accelerated depreciation. ’s staff spent over 100 hours performing proper reconciliation of project costs given the complexity of the project. Field activities included 10 mandays on site reconnaissance, given the unique nature of the property and the need to evaluate each guest room.

Estimate of Benefits & Savings:

The pre-engagement estimate we provided to the client showed a potential reallocation of $24,318,334 or 30% to shorter depreciable lives. The projected tax benefit was $601,383 in NPV savings over the next 10 years with $229,332 in tax savings available for the current tax year.

Results:

Our study resulted in a total of $11,193,668 or 37.3% being rescheduled to 5-year and 15-year property. As a result, the property owner’s tax savings is projected to be $2,690,081 in NPV savings over the next 10 years with $2,340,692 in tax savings available for the current tax year.