QEA: Quantum Engineering Associates Inc

Case Studies

APARTMENT BUILDING

APARTMENT COMPLEX

Project Overview

QEA, Inc. was engaged by the owner's of a real estate development company to conduct an Engineering-based Cost Segregation Study for a new apartment complex. The Study objective was to identity property components that could be reclassified to shorter recovery periods to accelerate building depreciation and defer income taxes.

Tax Benefits Summary

Cost Basis: $9,987,284

Cost Reallocated: $2,653,008

Reallocation Percent: 26.6%

1st Year Deferred Tax: $116,636

Total Deferred Tax: $456,942

Project Results

As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $2,653,008 or 26.6% of the assets to shorter recovery. The client's projected tax benefits on a Net Present Value (NPV) basis were projected to be a total of $456,942 and a first year tax benefit of $116,636.

Property Profile

The property is a two and three story apartment complex and clubhouse containing about 247,430 square feet. The wood framed structures are enclosed with Hardiplank siding and brick, with insulated glass in vinyl clad wood frames. Roof construction consists of a fiberglass shingle roof system. The core design of the apartment complex includes individual apartments consisting of bath rooms, utility rooms, bedrooms, kitchens, and living and dining rooms. The clubhouse has a club room, open and individual office areas, computer room, laundry, mechanical room, exercise room, and pool equipment and storage rooms. The service systems include standard plumbing fixtures; copper, steel, PVC, and cast-iron sanitary and waste piping systems. There is a year round heating, ventilating, and air-conditioning system. Electrical systems include power distribution equipment; fluorescent and incandescent light fixtures, receptacles, switches, conduit, and wire. Land improvements for the site include asphalt and concrete paving, concrete curbing, site signage, concrete sidewalks, under ground utilities, concrete dumpster pad and screen wall, and general landscaping with irrigation. The property has a cost basis of $9,987,284 and was acquired and placed in service in 2005.

Engineering Process

Our construction engineers performed a complete analysis of all available construction drawings and specifications, contractor payment applications, invoices, and other supporting documentation. We prepared a detailed analysis of all accumulated data on a property unit basis for cost allocation purposes under the provisions of the Internal Revenue Code. We then performed an on-site inspection to verify, photograph, and document the property. Finally, our internal audit team of senior construction engineers and tax specialists reviewed and certified its completeness and accuracy.

Cost Segregation Defined \| Should You Use QEA? \| Questions When Choosing \| Additional Services \| Benefits \| Proposals \| Case Studies \| Benchmark Questions \| Home
	Case Studies APARTMENT BUILDING APARTMENT COMPLEX Project Overview QEA, Inc. was engaged by the owner's of a real estate development company to conduct an Engineering-based Cost Segregation Study for a new apartment complex. The Study objective was to identity property components that could be reclassified to shorter recovery periods to accelerate building depreciation and defer income taxes. Tax Benefits Summary Cost Basis: $9,987,284 Cost Reallocated: $2,653,008 Reallocation Percent: 26.6% 1st Year Deferred Tax: $116,636 Total Deferred Tax: $456,942 Project Results As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $2,653,008 or 26.6% of the assets to shorter recovery. The client's projected tax benefits on a Net Present Value (NPV) basis were projected to be a total of $456,942 and a first year tax benefit of $116,636. Property Profile The property is a two and three story apartment complex and clubhouse containing about 247,430 square feet. The wood framed structures are enclosed with Hardiplank siding and brick, with insulated glass in vinyl clad wood frames. Roof construction consists of a fiberglass shingle roof system. The core design of the apartment complex includes individual apartments consisting of bath rooms, utility rooms, bedrooms, kitchens, and living and dining rooms. The clubhouse has a club room, open and individual office areas, computer room, laundry, mechanical room, exercise room, and pool equipment and storage rooms. The service systems include standard plumbing fixtures; copper, steel, PVC, and cast-iron sanitary and waste piping systems. There is a year round heating, ventilating, and air-conditioning system. Electrical systems include power distribution equipment; fluorescent and incandescent light fixtures, receptacles, switches, conduit, and wire. Land improvements for the site include asphalt and concrete paving, concrete curbing, site signage, concrete sidewalks, under ground utilities, concrete dumpster pad and screen wall, and general landscaping with irrigation. The property has a cost basis of $9,987,284 and was acquired and placed in service in 2005. Engineering Process Our construction engineers performed a complete analysis of all available construction drawings and specifications, contractor payment applications, invoices, and other supporting documentation. We prepared a detailed analysis of all accumulated data on a property unit basis for cost allocation purposes under the provisions of the Internal Revenue Code. We then performed an on-site inspection to verify, photograph, and document the property. Finally, our internal audit team of senior construction engineers and tax specialists reviewed and certified its completeness and accuracy.