Office Buildings

The building was purchased for $8,000,000. Located on a 6.6 acre tract, our analysis indicated that 31.37%, or $2,509,200, should be allocated to the value of the land, with the remaining $5,490,800 allocated to the improvements. During our site visit to the property we identified site improvements including asphalt paving, walkway canopies, monument and directional signage, wrought iron and wood fencing, and irrigated landscaping, all of which qualified for accelerated depreciation. Our walkthrough of the interior revealed additional short-life depreciable assets including carpeting and VCT flooring, decorative light fixtures, special-use millwork and cabinets, data cabling, and special-use HVAC systems serving computer/IT areas. Additionally, within a dental office suite we found special-use plumbing and electrical systems being used to serve the specific purposes of the dental office function. As a result of the study we were able segregate the $5,490,800 improvement/depreciable basis into the following depreciation classes:

5- year: $564,110
7- year: $13,513
15- year: $565,781
39- year: $4,347,396
TOTAL: $5,490,800

Again, with 100% Bonus Depreciation the net first year depreciation was $1,250,393, with a first year tax savings of $462,646 and a payback ratio of 115:1.