Restaurant Cost Segregation Case Study
No Cost Segregation Study
Total Depreciation
$60,187
Cost Segregation Study
Total Depreciation
$885,998
5 Year Assets
15 Year Assets
39 Year Assets
Total Tax Benefits
$247,743
Property Type
Resturant
#Of Buildings
2
Building Cost
$2,965,00
Square Feet
68,150
Lot Size
6.4
TOP DEPRECIATED ASSETS
Why is Cost Segregation Beneficial to Restaurants?
Shorter Life Assets
Cost segregation allows restaurants to identify and reclassify certain assets with shorter depreciable lives.
Items like kitchen equipment, decorative elements, and specialized lighting can be depreciated over 5, 7, or 15 years instead of the standard 39-year period for nonresidential real property.
This acceleration of depreciation results in higher tax deductions in the earlier years of ownership, providing immediate financial benefits.
Specialized Kitchen Equipment
Restaurants heavily invest in specialized kitchen equipment, including ovens, stoves, refrigerators, and exhaust systems.
These assets can be identified and reclassified through cost segregation, allowing for faster depreciation and tax savings.
Landscaping & Outdoor Areas
If a restaurant has outdoor dining spaces, landscaping, or other outdoor improvements, cost segregation can identify and accelerate the depreciation of these components, resulting in additional tax benefits.
Interior Decor & Lighting
Decorative elements, interior finishes, and unique lighting fixtures contribute to the ambiance and theme of a restaurant. Cost segregation helps differentiate these elements from the building structure, enabling faster depreciation and tax benefits.
Technology & POS Systems
Restaurants rely on technology for point-of-sale (POS) systems, reservation systems, and kitchen display systems.
The hardware and software associated with these systems can be segregated for accelerated depreciation, aligning with the shorter life cycle of technology assets.
Renovations and Improvement Costs
Restaurants often undergo renovations or remodels to update their interiors, enhance the dining experience, or comply with changing regulations.
Cost segregation enables the identification and separate depreciation of assets associated with these improvements. By accelerating the depreciation of these components, restaurants can enjoy quicker tax write-offs for the costs incurred.