Cost Segregation Per Property Type
What kind of percentage can be realized per type of property and who/what qualifies?
| Property Type | Reclassification | Property Type | Reclassification |
| Restaurants | 20~45% | Apartment Buildings | 20~45% |
| Hotels | 30~50% | Fitness Centers | 22~45% |
| Shopping Malls | 22~40% | Banks | 30~47% |
| Medical/Dental | 22~35% | Manufacturing | 30~45% |
| Warehouses | 22~40% | TV/Radio/Cell Firms | 22~40% |
| Airplane Hangers | 18~35% | Leaseholds | 18~40% |
| CC & Courses | 28~60% | Research Facilities | 22~45% |
| Retail Facilities | 18~35% | Assisted Living/Retirement | 22~45% |
| Theme Park | 16~22% | Resorts | 25~45% |
| Office Buildings | 20~35% | Wineries | 18~25% |
| Grocery Stores | 20~45% | Mixed Use Properties | 18~30% |
* The actual savings vary according to the design of the facility, specific use, date of service and the actual costs associated with the property.
Who/What Qualifies?
• Purchased or constructed a building (land is excluded) of $250,000 and above or leaseholder who has spent $250K or more on improvements (e.g. purchases, renovation, fitout) since 1987.
• Has paid federal taxes within the last four years or plans to this year.
• Plans on holding property for at least 2 years. *
• Plans on conducting a demolition or major renovation project.
• Has owned the building after 1987.
* An owner can get a Cost Segregation Study done, utilize it for tax savings and sell the building before two years. Only recommended if owner is going to do a 1031 Exchange. Reason being capital gains could wipe out any tax benefit to be had by utilizing a Cost Seg Study then selling it and realizing the profits.
1031 Exchanges are ideal for most property owners. What happens when an owner has a cost segregation study done and then sells the property and does a 1031 Exchange? Since 1031s require an owner to buy something of equal or great value (most common 1031), the benefits of the cost seg study carries over to the new property. E.g. if owner had a Cost Segregation Study done on his $1 million property then does a 1031 exchange by buying another property for $1.5 million, a new cost seg study can be done on the $500k.