Auto Dealership Cost Segregation
Case Study
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
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.