Multi family with 1031 Tax Exchange

multi family lobby.jpg

FACILITY TYPE
Multi Family Building
470,000 sf

BUILDING DATA
Purchase price: $56,000,000
Depreciable Basis: $18,288,441
Space Type: Purchased
Look back: Yes
Additional Benefits: No

SAVINGS IDENTIFIED:
$966,974

OBJECTIVES

This owner purchased the property using a 1031 Tax Exchange and wanted to further enhance income tax savings with a cost segregation analysis.

RESULT

The purchase price of this building was approximately $56M; due to the 1031 exchange, depreciable basis eligible for a cost segregation study was limited to $18M. Had the client been the original owner of the property, and conducted a first year study, additional benefit could have been provided through Bonus Depreciation, increasing the identified savings to $1,068,840. Due to the significant value of the assets purchased Section 179 was not available. If this property was not a part of a Sec. 1031 Exchange, the eligible savings for this owner would have been $2,960,916.