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Benefits

Financial Benefits

  • Increased cash flow through tax benefits achieved from accelerated depreciation.
  • Increased net present value of tax savings achieved from accelerated depreciation.
  • Independent third-party analysis that will withstand Internal Revenue Service examination.

A client recently constructed 14 restaurants, at a total project cost of $7,898,200. The client did not allocate any of their costs into shorter depreciable tax lives and treated the entire $7,898,200 project cost as 39-year property.

Depreciation scenario

PV Chart

By recovering costs over a shorter period of time, property owners will realize substantial tax savings. A CSS allocates total building costs between real property (27.5-39 year life) and personal property (5-15 year life). This reallocation of costs from real to personal property typically amounts to a 25-40% benefit over the traditional depreciation method.

Accelerated Depreciation Benefits Calculator

Total cost of the building (excluding land):

dollars

Years of amortization remaining:

years

Tax Rate:

%


This calculator uses the following assumptions:

  • The building is new and does not have any accumulated amortization associated with it.
  • Cost of capital is 8%.
  • 50% of the building costs are able to be depreciated over 8 year period.

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