Cost Segregation Study for 6501 Darter Ct, Fort Pierce, FL 34945

Property Overview:

• Property Address: 6501 Darter Ct, Fort Pierce, FL 34945

• Property Type: Commercial (Former Denny’s Restaurant)

• Year Built: 1988

• Square Footage: 4,672 sq ft

• Land Value: $795,000 (46% of total assessed value)

• Building Value (Improvements): $916,000 (54% of total assessed value)

• Total Assessed Value: $1.71 million (as of latest appraisal)

Purchase Details:

• Last Purchase Price: $625,000 (Sold November 27, 2018)

• Use of Property: Restaurant (currently vacant)

Property Breakdown for Cost Segregation

In cost segregation, we break down the cost of the property into components that depreciate over shorter periods (typically 5, 7, or 15 years) versus longer periods (27.5 years for residential and 39 years for commercial property). This allows the owner to accelerate depreciation and potentially reduce tax liability in the early years of property ownership.

1. Land Value (Non-depreciable)

• Land: $795,000

• Depreciation: N/A (land is not depreciable)

2. Building Improvements (Depreciable)

The building value of $916,000 will be divided into different components for depreciation purposes.

A. Structural Components (39-Year Depreciation)

These include the primary structural elements of the building, which will be depreciated over 39 years. These elements are fundamental to the building’s operation but are not subject to accelerated depreciation.

• Foundation: Concrete slab (assumed)

• Exterior walls: Concrete block/stucco

• Roof structure: Metal roof

• HVAC systems: Central HVAC, ducts

• Plumbing: Fixtures, commercial kitchen plumbing

• Electrical: Main service, distribution panels

• Depreciation Schedule: 39 years

• Estimated Value: $540,000 (60% of the building value)

B. Personal Property (5-7 Year Depreciation)

This includes items that are not integral to the structure, but rather personal property within the building, which can be depreciated over 5 or 7 years. This would include:

• Kitchen Equipment: Ovens, refrigerators, freezers, hoods, and stainless steel workstations

• Furniture and Fixtures: Tables, chairs, booths, and light fixtures

• Decor: Wall treatments, signage, etc.

• Depreciation Schedule: 5-7 years

• Estimated Value: $170,000 (20% of the building value)

C. Land Improvements (15-Year Depreciation)

These are the items related to the land but not the building itself. They include parking lots, landscaping, sidewalks, and external lighting.

• Parking lot: Asphalt paving, curbing

• Exterior lighting: Pole lights, external electrical systems

• Landscaping: Trees, shrubbery, irrigation systems

• Depreciation Schedule: 15 years

• Estimated Value: $206,000 (20% of the building value)

Depreciation Summary

Tax Savings Potential

Accelerated Depreciation: By reclassifying portions of the building (personal property and land improvements) into shorter depreciation periods, the property owner can benefit from accelerated depreciation, which reduces taxable income in the early years of ownership.

Here’s an example of the first-year depreciation you can expect:

1. Personal Property Depreciation (5-7 Years):
   Estimated first-year depreciation: $34,000 (assuming 5-year schedule)

2. Land Improvements Depreciation (15 Years):
   Estimated first-year depreciation: $13,733

3. Structural Depreciation (39 Years):
   Estimated first-year depreciation: $13,846

Thus, the total first-year depreciation would be approximately $61,579 in year 1.

Tax Benefit Estimate (Assuming 25% Tax Rate)

With accelerated depreciation, you could potentially reduce your tax liability by:

• First-year tax savings:
  $61,579 * 25% = $15,394.75

Conclusion

By using cost segregation, you can accelerate depreciation for the property at 6501 Darter Ct, Fort Pierce, FL, and realize significant tax savings in the early years of ownership. This approach will be especially beneficial for commercial real estate owners looking to maximize their tax deductions.

This is a high-level cost segregation study based on available data. For a more precise and detailed study, it’s recommended to hire a qualified cost segregation professional who can physically inspect the property and provide exact figures based on current tax laws and depreciation rules.