Increase the cash flow of your apartment building

Market conditions in the apartment industry continue to improve and remain strong. According to the National Multi-Housing Council (NMHC), markets are tighter, sales volume has increased and financing is more available. Many apartment owners have increased the profitability of lower vacancies/higher rents. With higher profitability comes increased tax liabilities. Engineered cost segregation can help apartment owners reduce their tax burden, increase their cash flow, and maximize their return on investment.

Here is a summary of the results of a cost segregation study in a 150-unit apartment complex:

This 5 building, 150 unit garden style apartment complex contains 109,654 square feet of gross building area and is located on a 5.51 acre site. The property was purchased in 2008 for $5,525,000 of which $828,750 was for land. In addition, a major renovation totaling $1,518,220 was completed in 2008 and included in the study. A significant portion of the improvements qualified for an additional 50% depreciation.

Customer benefit:

The engineering-based cost segregation study provided an additional depreciation of $1,551,665 above the straight-line method. Resulting in a tax benefit to the client of $624,666 during the first six years of ownership.

Rates and return on investment:

Total professional fee $13,500

NET charge after taxes $8,100

Return on investment 71.1:1

This sample is based on the actual results of a full study. Benefit figures are based on a combined federal and state income tax rate of 40%. Although the sample represents a specific type of property, actual results may vary.