Future-Proofed Tax Strategy: $10.35M Cost Segregation Acquisition Study with Strategic Abandonment Deduction
- Bob Montes
- Jun 23
- 2 min read
Published by Data Wise | June 2025
Category: Cost Segregation, Tax Strategy, Commercial Real Estate
Project Overview
In August 2024, Data Wise was engaged to complete a cost segregation and abandonment analysis for a newly acquired 30,342 SF corporate headquarters and warehouse property situated on a 67,000+ SF site. With $3M in building improvements planned for 2025, we positioned the client to maximize depreciation deductions ahead of those renovations — with outstanding results.
Property Details
Property Type: Freestanding Corporate HQ / Warehouse
Office Area: Approx. 16,500 SF (2-story)
Warehouse Area: Approx. 14,000 SF
Surface Parking: 64 stalls
Acquisition Date: August 2024
Purchase Price: $10,350,000
2025 Improvement Budget: $3M
$1.5M – Pharma Distribution Systems
$1.5M – Warehouse Automation
Scope of Work
Site Inspection & Documentation
2024 Engineered Cost Segregation Study (Acquisition)
2025 Engineered Cost Segregation Study (Future Improvements)
Abandonment Study
Audit-Ready Cost Segregation Report
2024 Study Results
Asset Allocation by MACRS Class:
Asset Class | Value | Life | Depreciation |
|---|---|---|---|
Land | $3,156,000 | Non-Depreciable | — |
Sec. 263(a) / No Value Added | $1,267,000 | 0-Year | 100% Expensed (2024) |
Short-Life (5–15 Year) Assets | $785,905 | 5–15 Years | Bonus Eligible (60%) |
39-Year Real Property | $5,144,507 | 39 Years | Straight-Line |
See our visual breakdown below:
Accelerated Depreciation - $2,052,905 Year 1 Depreciation - $1,849,084
Accelerated Percentage - 28.5% (Accelerated + Year 1 of 39 Year Assets)
100% Abandonment Deduction Captured
The planned 2025 improvements provided an opportunity to identify and isolate $1.267M in non-value-added (NVA) assets. These assets — slated for removal or replacement — were fully expensed under Section 263(a) in 2024 as part of a 100% abandonment deduction.
This strategic move:
Eliminates depreciation of "ghost assets"
Lowers current and future property tax basis
Aligns with upcoming capital upgrades
Maximizes upfront tax deductions
Property Tax Allocation (Post-Study)
Item | Value | % of Total |
|---|---|---|
Land | $3,156,000 | 30.5% |
Abandoned/NVA Assets (Expensed) | $1,267,000 | 12.2% |
Land Improvements & Fixtures | $598,958 | 5.7% |
Structures (Remaining Basis) | $5,331,454 | 51.5% |
Total | $10,353,412 | 100% |
Project Gallery
Key Takeaway
This study is a textbook example of how early engagement and planning can significantly increase tax efficiency. By capturing abandonment deductions before capital improvements, the property owner has:
Reduced 2024 tax liability
Lowered the building’s tax basis
Streamlined depreciation planning for future improvements
Improved compliance and audit defense
Planning a property upgrade or acquisition?
Let Data Wise help you optimize your next investment with a tailored cost segregation strategy.
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