Auto Dealership Cost Segregation

Case Study

Car Dealership

No Cost Segregation Study

Total Depreciation

$6,629

Cost Segregation Study

Total Depreciation

$1,068,368

5 Year Assets

15 Year Assets

39 Year Assets

Total Tax Benefits

$372,180

Property Type

Auto Dealership

#Of Floors

1

Building Cost

$2,068,368

Square Feet

22,000 SF

Lot Size

12,000

TOP DEPRECIATED ASSETS

Electrical box
Land Improvements
Red car

Why is Cost Segregation Beneficial to

Auto Dealerships?

Accelerated Depreciation for Showroom

Auto dealerships often invest significantly in creating attractive showrooms with specific features like specialized flooring, lighting, and display areas.

Cost segregation enables the identification and reclassification of these components for accelerated depreciation.

This allows auto dealerships to depreciate these assets over shorter recovery periods (e.g., 5, 7, or 15 years), resulting in increased tax deductions in the early years of ownership.

Signage & Branding

Auto dealerships invest in signage and branding elements to attract customers and promote their brands.

Cost segregation helps separate the costs associated with these marketing assets, allowing for faster depreciation and increased tax deductions.

Demolition and Site Work

When auto dealerships acquire or build new facilities, there may be costs associated with demolition, site work, and land improvements.

Cost segregation allows for the proper identification and depreciation of these elements, optimizing tax benefits.

Technology Infrastructure

Auto dealerships have service departments with specialized equipment, such as lifts, diagnostic tools, and other machinery.

Cost segregation allows for the identification and segregation of these assets, enabling faster depreciation and immediate tax benefits.

Service Bay Equipment

Dealerships heavily rely on technology for inventory management, point-of-sale systems, and customer interaction.

Cost segregation helps differentiate the hardware and software associated with these systems, allowing for accelerated depreciation in line with the shorter life cycle of technology assets.

Showroom & Lot Improvements

Auto dealerships often make improvements to their showrooms, lots, and outdoor spaces to enhance customer experience and comply with manufacturer standards.

Cost segregation can be applied to identify and segregate the costs associated with these improvements, leading to faster depreciation and increased tax savings.