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Case Studies

Cost Segregation for a Grocery Store

A Comprehensive Source Advisors Case Study

Cost Segregation for a Grocery Store

The world of apartment complexes presents diverse challenges for cost segregation. This case study revolves around a vast 18-building garden-style apartment complex, showcasing how Source Advisors transformed the financial landscape of the property’s acquisition.

About the Store

This property is a high end, newly constructed, free-standing grocery store. The construction costs was $18,100,000 and it was placed-in-service in 2017.

The store is 48,000 square feet and sits on a three-acre site. The building is organized into a main floor for grocery sales with a mezzanine level for administrative functions and classrooms designed for cooking lessons.

The Challenges

Due to the grocery store’s luxurious nature and complex systems, a primary challenge was meticulously identifying and classifying assets for appropriate tax categorizations.

The store’s specialized sections and intricate systems, such as produce watering and backup power with a large generator, added layers of complexity to the study.

Property Breakdown

The main floor has numerous departments including a butcher’s department, seafood, bakery, wine, produce, floral, etc. Interior finishes consist of vinyl tile, carpet, ceramic tile, and drywall partitions finished with paint.

The store had significant numbers of cable trays, trenches, produce watering systems, supplemental HVAC, and backup power including a large emergency generator. Site improvements include asphalt paving, brick paving, concrete paving, cart corrals, fencing, and landscaping.

The Source Advisors Solution

Source Advisors Cost Segregation engineers were engaged to analyze the actual construction costs, in the form of contractor invoices, and allocated the cost detail to various trades and building components.

Our engineers conducted detailed estimates from the construction drawings and augmented those findings with additional estimates performed during the site visit of the property. Key property personnel were also interviewed. A detailed report was delivered, identifying and documenting all of the components that qualify for a shorter tax life.

Financial Results

Following this extensive examination, Source Advisors accomplished:

8% or
$1,450,000

identified as 15-year land improvements.

22% or
$3,980,000

marked as 5-year tangible personal property.

The store's results leaned towards the higher end, owing to its opulence and complex systems. And, as this was new construction introduced in 2017, the store qualified for 50% bonus depreciation.

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Don’t leave money on the table. Contact Source Advisors to find out how Cost Segregation can work wonders for your bottom line.

Discover the Source Advisors Difference

Our industry experience with cost segregation has helped businesses claim billions of dollars in tax credits and incentives.

Expert Analysis

Our engineers excel at delineating construction costs to yield the highest tax benefits.

Proven Track Record

Our 40-year history of achieving substantial tax credit savings for clients across various industries is a testament to our commitment and expertise.

Precision

Our thorough reporting ensures every qualifying cost is adeptly reclassified.

Seamless Client Experience

Our dedicated support team is readily available to guide you through every step of the process, ensuring a smooth and stress-free experience.

Legally Robust

Our recommendations stand in full compliance with tax legislations, offering clients unmatched peace of mind.