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The IRS allows accelerated depreciation on chattel in income-producing
property.*
With a chattel valuation (a residential cost segregation
study) provided by Chattel Professionals, you can
accelerate depreciation on personal property to save
thousands of tax dollars over several years.
Using very conservative figures, here is an example.** |
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| Year 1 |
Without a Chattel Report |
With a Chattel Report |
| Land |
$ 40,000 |
$ 40,000 |
| Building |
$ 160,000 |
$ 140,000 |
| Tangible Personal Property |
$ ----- |
$ 20,000 |
| Depreciation Allowance |
$ 5,818 |
$ 9,091 |
Potential
Tax Savings (25% Tax Bracket)
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$ 1,455 |
$ 2,272 |
| An
Increased Tax Savings of $817.00 |
| Year 2 |
Without a Chattel Report |
With a Chattel Report |
| Land |
$ 40,000 |
$ 40,000 |
| Building |
$ 160,000 |
$ 140,000 |
| Tangible Personal Property |
$ ----- |
$ 20,000 |
| Depreciation Allowance |
$ 5,818 |
$ 11,491 |
| Potential
Tax Savings
(25% Tax Bracket) |
$ 1,455 |
$ 2,873 |
| An
Increased Tax Savings of $1,418.00 |
Total
NET Tax Savings over a 6 year period = $3,909
- an ROI
of 556%!
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| Year 1 |
Without a Chattel Report |
With a Chattel Report |
| Land |
$ 390,000 |
$ 390,000 |
| Building |
$ 910,000 |
$ 780,000 |
| Tangible Personal Property |
$ ----- |
$ 130,000 |
| Depreciation Allowance |
$ 33,091 |
$ 54,364 |
Potential
Tax Savings (25%
Tax Bracket)
|
$ 8,273 |
$ 13,591 |
| An
Increased Tax Savings of $5,318 |
| Year 2 |
Without a Chattel Report |
With a Chattel Report |
| Land |
$ 390,000 |
$ 390,000 |
| Building |
$ 910,000 |
$ 780,000 |
| Tangible Personal Property |
$ ----- |
$ 130,000 |
| Depreciation Allowance |
$ 33,091 |
$ 69,964 |
| Potential
Tax Savings (25%
Tax Bracket) |
$ 8,273 |
$ 17,491 |
| An
Increased Tax Savings of $9,218 |
Total
NET Tax Savings over a 6 year period = $25,409
- an ROI
of 239%.
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*Under Code 167(a), the IRS allows
a reasonable allowance for a deduction, over time,
for the cost of capital or income earning assets.
Code Sections 38 & 168 and Revenue Procedure 87-56
later clarified by Revenue Procedure 88-22, provide
guidance on the life of a given object that is depreciable.
**No Federal or state tax advice is provided. Do not
rely on the examples. Instead, you should seek advice
from an independent tax advisor with respect to your
transaction or matter in order to receive tax advice
that is based on your particular circumstances. |
How do you calculate Return
on Investment (ROI)?
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“I’d gladly pay you Tuesday for a hamburger
today.”
-Popeye's sidekick, J. Wellington Wimpy
When considering investments, we calculate ROI to determine
and compare profitability, or benefits versus costs. The
calculation produces a number – a performance measure
– so you can judge the profitability. So what is the
Tuesday payoff that Wimpy offers?
| ROI = |
Wimpy’s payback
to you – The money you paid for the
hamburger
The money you paid for the hamburger
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If you pay $2.75 for Wimpy to have a hamburger today, and
he agrees to pay you $4.00 on Tuesday, here is the performance
measure:
| ROI = |
$4.00 - $2.75
$2.75
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= 45% |
That is the simplest way to calculate ROI. See the sample
ROIs on a chattel appraisal in our Case
Studies or call us to talk about an estimate on your
situation – 888-844-1390.
ROI calculations are easily manipulated and can
be more complicated. You can determine to include
or exclude many other elements for your costs and
returns – a time factor, income, carrying
costs, for example. Here is an online calculator
that includes many factors for figuring ROI on a
real estate investment: http://www.fincalc.com/inv_04.asp?id=6 |
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