From the April 2008 issue of Investment Advisor • Subscribe!

When Segregation Is Good

Estimate of depreciation benefit from cost segregation

Assumptions

Value of Building $3,000,000

Tax Bracket 35%

Discount Rate 5.00%

A B
No Cost Segregation With Cost Segregation
Year 39 Years 39 Years 15 Years 10 Years 7 Years 5 Years Total Increase or Decrease (G-A) Tax Savings (H X .35) PV of Tax Savings Cumulative Value of Tax Savings
1 $38,460 $29,999 $3,000 $12,000 $25,722 $60,000 $130,721 $92,261 $32,291 $30,754 $30,754
2 $76,920 $59,998 $5,700 $21,600 $44,082 $96,000 $227,380 $150,460 $52,661 $47,765 $78,519
3 $76,920 $59,998 $5,130 $17,280 $31,482 $57,600 $171,490 $94,570 $33,099 $28,592 $107,111
4 $76,920 $59,998 $4,620 $13,824 $22,482 $34,560 $135,484 $58,564 $20,497 $16,863 $123,974
5 $76,920 $59,998 $4,158 $11,064 $16,074 $34,560 $125,854 $48,934 $17,127 $13,419 $137,393
6 $76,920 $59,998 $3,738 $8,844 $16,056 $17,280 $105,916 $28,996 $10,148 $7,573 $144,966
7 $76,920 $59,998 $3,540 $7,860 $16,074 $87,472 $10,552 $3,693 $2,625 $147,591
8 $76,920 $59,998 $3,540 $7,860 $8,028 $79,426 $2,506 $877 $594 $148,185
9 $76,920 $59,998 $3,546 $7,872 $71,416 ($5,504) ($1,927) ($1,242) $146,943
10 $76,920 $59,998 $3,540 $7,860 $71,398 ($5,522) ($1,933) ($1,187) $145,756
11 $76,920 $59,998 $3,546 $3,936 $67,480 ($9,440) ($3,304) ($1,932) $143,824
12 $76,920 $59,998 $3,540 $63,538 ($13,382) ($4,684) ($2,608) $141,216
13 $76,920 $59,998 $3,546 $63,544 ($13,376) ($4,682) ($2,483) $138,733
14 $76,920 $59,998 $3,540 $63,538 ($13,382) ($4,684) ($2,366) $136,368
15 $76,920 $59,998 $3,546 $63,544 ($13,376) ($4,682) ($2,252) $134,116
16 $76,920 $59,998 $1,770 $61,768 ($15,152) ($5,303) ($2,430) $131,686
17 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,584) $129,102
18 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,461) $126,641
19 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,344) $124,297
20 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,232) $122,065
21 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,126) $119,939
22 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($2,025) $117,914
23 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,928) $115,986
24 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,836) $114,149
25 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,749) $112,400
26 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,666) $110,735
27 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,586) $109,148
28 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,511) $107,637
29 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,439) $106,198
30 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,370) $104,828
31 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,305) $103,523
32 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,243) $102,280
33 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,184) $101,096
34 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,127) $99,968
35 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,074) $98,895
36 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($1,023) $97,872
37 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($974) $96,898
38 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($928) $95,971
39 $76,920 $59,998 $59,998 ($16,922) ($5,923) ($883) $95,087
40 $38,580 $30,092 $30,092 ($8,488) ($2,971) ($422) $94,665
$3,000,000 $2,340,000 $60,000 $120,000 $180,000 $300,000 $3,000,000
78.00% 10.00% 6.00% 4.00% 2.00%
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