Real Estate Cost Segregation XPT-precise tax depreciation analysis

Example

Categorizing components of a new office building such as lighting fixtures, carpeting, and wall coverings as personal property rather than real property.

Scenario

A real estate company purchases a building intended for lease. The XPT is used to segregate the costs of movable partitions and decorative lighting from the building’s structural components. This reclassification results in the assets being depreciated over 5 years instead of 39 years, enhancing the company's first-year tax deductions.

Example

Creating a depreciation schedule that maximizes tax deductions over the asset's useful life.

Scenario

A property owner engages the XPT to generate a depreciation schedule for a newly constructed retail space. Using the XPT, they can depreciate landscaping and exterior improvements over 15 years and signage over 7 years, rather than depreciating the entire cost of the property over 39 years.

Example

Estimating potential tax savings for a client by applying cost segregation study findings.

Scenario

An accounting firm uses the XPT to estimate tax savings for a client who has invested in a multifamily housing complex. By reallocating 20% of the property’s purchase price to personal property and land improvements, the XPT calculates a substantial reduction in tax liability over the first five years post-purchase.