Retail complexes present unique tax challenges and opportunities. This case study illustrates how Source Advisors optimized a multi-tenant retail property’s acquisition costs for substantial tax benefits.
This big box retail center, with an acquisition value of $15,000,000, was a commercial hub. It hosted a variety of tenants: a home center, two home furnishing outlets, a specialty grocery store, a mattress retailer, and four high-end food service tenants.
A big box retail center, especially with a mix of varied tenants, demands a meticulous breakdown of the combined acquisition costs. The primary objective was to discern each component accurately to maximize tax benefits while navigating the complex tax implications associated with each tenant’s unique infrastructure.
Comprising four expansive buildings, the center sprawled over 300,000 square feet. The surrounding area, roughly 600,000 square feet, featured amenities such as asphalt and concrete parking, sidewalks, curbs, efficient rainwater drainage systems, and aesthetic landscaping, all of which were potential Land Improvements.
The interiors, tailored to the unique needs of retail and food service outlets, featured millwork, data and point-of-sale setups, vinyl flooring, ornamental lighting, and essential utilities like electrical, plumbing, and HVAC systems. These elements were viable candidates for Personal Property classification.
The Source Advisors Cost Segregation engineers were engaged to analyze the acquisition cost. They then applied a cost model to allocate the purchase price to various trades and building components.
Our engineers conducted a thorough inspection of the property where estimates were performed. Key property personnel were also interviewed, and a detailed report was delivered, identifying and documenting all the components that qualify for a shorter tax life.
By employing an in-depth Cost Segregation analysis, Source Advisors successfully translated the big box retailer’s construction expenditures into significant tax reductions.
Don’t leave money on the table. Contact Source Advisors to find out how Cost Segregation can work wonders for your bottom line.
Our industry experience with cost segregation has helped businesses claim billions of dollars in tax credits and incentives.
Our engineers excel at delineating construction costs to yield the highest tax benefits.
Our 40-year history of achieving substantial tax credit savings for clients across various industries is a testament to our commitment and expertise.
Our thorough reporting ensures every qualifying cost is adeptly reclassified.
Our dedicated support team is readily available to guide you through every step of the process, ensuring a smooth and stress-free experience.
Our recommendations stand in full compliance with tax legislations, offering clients unmatched peace of mind.
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