Client Background
An assisted living facility sought ways to reduce tax liabilities and improve cash flow. The owner had heard of cost segregation studies but wasn’t sure if it would apply to their business. The client hired Development Theory to help with a cost segregation study.
The Challenge
High Tax Liabilities: The facility had significant depreciation but wasn’t leveraging it properly.
Complex Property Structure: The building contained residential units, medical offices, and common spaces, requiring detailed asset classification.
Cash Flow Constraints: The owner needed immediate tax relief to reinvest in new facilities.
IRS Compliance Concerns: The owner wanted to ensure the cost segregation study met IRS guidelines.
Our Approach
Engineering-Based Cost Segregation Study: Conducted a breakdown of assets to accelerate depreciation.
Tax Savings Analysis: Identified assets that could be depreciated over 5, 7, and 15 years instead of 39 years.
Retroactive Tax Adjustments: Helped the owner apply the depreciation changes to prior tax years to reclaim overpaid taxes.
Cash Flow Impact Modeling: Forecasted immediate and long-term financial benefits.
IRS Compliance Assurance: Ensured the study met all IRS regulations, minimizing audit risks.
The Solution
Accelerated depreciation on over 40% of building assets.
Saved the owner $275,000 in taxes over five years.
Structured a reinvestment plan, allowing for upgrades to patient care facilities.
Created a long-term tax strategy, ensuring continued financial benefits.
Results & Impact
Reduced taxable income significantly, improving net profitability.
Recovered past overpaid taxes, boosting immediate cash flow.
Enabled facility expansion, allowing for new patient services.
Strengthened long-term financial sustainability, supporting future growth.
Client Feedback
"I didn’t realize how much I was leaving on the table in tax savings. The cost segregation study gave me immediate cash flow benefits and long-term financial advantages!"
Development Theory Can Help Business Owners Like You
Are you leaving money on the table with slow depreciation? A Cost Segregation Study can accelerate your tax deductions, improve cash flow, and free up capital to reinvest in your business. Whether you own commercial real estate, a rental property, or a specialty facility, our team at Development Theory helps business owners maximize tax savings while staying IRS-compliant. The best time to conduct a study is within the first few years of property ownership or after major renovations—don’t wait to take advantage of these savings.
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