Restaurant Cost Segregation Case Study

Study Overview

In this case study done for tax year 2025, the Casual Dining Restaurant had a total cost of $1,420,000, not including land. Through cost segregation analysis, the owner was able to reclassify 20% of the total costs to either 5 or 7 year property and 16% of the total costs to 15 year property.

This resulted in a Net Present Value After Tax Benefit of over $92,000. The additional depreciation in the first year of the study was approximately $459,000.

Qualified Property

Qualified property for accelerated depreciation includes, but is not limited to: dedicated plumbing, electrical and gas piping to kitchen equipment, equipment hood fire detection/suppression systems, grease traps/tanks, walk-in coolers/freezers and related dedicated electrical and plumbing, cabinetry, counters, decorative millwork, decorative lighting and various land improvements. Some examples of land improvements include certain excavation work, storm water systems, fencing, paving, curbs, sidewalks, dumpster enclosures, landscaping and irrigation systems.