Cost Segregation Study on Entertainment Venue

[Julio Gonzalez]

Oftentimes we think of a cost segregation study only on residential properties or office buildings. But it can be so beneficial for a number of types of properties. While I have seen cost segregation studies generate an enormous benefit for real estate investors, I haven’t seen anything quite like the savings on a professional soccer stadium in Columbus, Ohio.

Facts about the study:

• Stadium placed into service on July 1, 2021
• Stadium cost $316M to build
• Total tax savings of $105M
• $76.4M in savings related to reclassification to 5 year useful life
• $30.4M in savings related to reclassification to 15 year useful life
• $40M of first year tax savings

Obviously those numbers are HUGE, so where did all of this tax savings come from? A large portion of the 5 year classification tax savings was related to the electrical installation. If you dive into the tax code, there are lots of tax saving areas for entertainment venues. Specifically, savings around retractable awnings, grow lights, seating and screens. Additionally, the VIP lounge in the stadium had a large amount of kitchen equipment that could be advertised. In the 80 private suites, they had hot plates and other electrical fixtures that were able to be segregated.

Most of us out there aren’t going and building $316M soccer stadiums. But we are building things outside the realm of the standard apartment complex or office building. What types of unique properties do you own or are building that could benefit from an engineered cost segregation study? Maybe you have a restaurant or bar, or a mobile home park, or a storage unit facility, or a horse stable or an auto dealership or repair shop, or a grocery store, or an entertainment venue. They could all be good candidates for a cost seg study that helps increase your cash flow. Most cost segregation companies offer a free cost/benefit analysis quote to help you decide.

What types of properties have you utilized cost segregation studies on?