Banks tend to be great cost segregation opportunities. Banks have a number of specialized systems that qualify for a shorter tax life, including; bank vault doors, teller windows and pneumatic tube systems. The teller windows and drive-up teller systems qualified pursuant to Rev. Rul. 65-79, 1965-1 C.B. 26., where the Service ruled that, “even though attached… walk-up and drive-up teller’s windows, are not structural components of a building, and their removal would not affect the continued operation of a bank building or booth as a building.
Security is typically tight, not only with heavy video surveillance, but with door and window mounted alarm sensors, and silent alarm systems triggered in cash drawers, under teller counters, and under certain desks.
Accelerating the depreciation on 18% – 32% of the capitalized costs is typical, depending on whether it’s a branch or main bank, level of security, number of drive-up systems, quality of the finishes, and extent of the site improvements.
Cost Segregation Case Study – Banks
The subject property is a bank that was newly constructed in 2019 for $2,400,000. The building included four teller windows, bank vault doors, teller windows, and pneumatic tube systems. There were also site improvements such as asphalt paving, landscaping, fencing, sidewalks, site drainage and site lighting.
The building is a one-story, steel frame structure, with exterior travertine panels with a built up roof. Interior finishes include tile flooring, decorative millwork and acoustical ceiling tiles.
The Source Advisors Cost Segregation engineers analyzed the construction costs, in the form of contractor invoices, and allocated the cost detail to various trades and building components. They 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.
Source Advisors reclassified 10% or $240,000 as 15-year land improvements and 10% or $240,000 as 5-year tangible personal property. The property qualifies for 100% bonus depreciation under the Tax Cuts and Jobs Act.