Hotel & Cost Segregation

Depreciable Life: 39 Years

Estimated Reallocation: 30%

Hospitality properties in a wide range of complexities from a small bed and breakfast owner to a portfolio of luxury hotels . Hotel market segments drive the development complexity in some areas that include laundry facilities, fitness centers, spas, golf courses, waterparks, shopping centers, movie theaters, ice-skating rinks and other sports recreation.

Hospitality typically identifies more personal property in the 5-year recovery period than most other property types. The guest room finishes, televisions, data connections, wet-bars, fully appointed kitchens and more. The outdoor amenities or 15-year land improvements can include parking structures, decorative lighting, elaborate landscaping, swimming pools and other communal areas.

  • Structural components include the building’s roof, walls, and foundation which depreciate over 39 years
  • Non-structural components can be depreciated over five years and include carpeting, molding, window coverings, security systems, and more
  • Property improvements like curbing, paving, and striping

Benefits of Reinvesting

  • Maintain ADR and occupancy by offering the best room and amenities in the hotel segment
  • Build a strong reputation for best of quality and cleanliness
  • Long track record of good reviews from positive guest experiences
  • Upgrading to energy efficient systems to lower operating costs
  • Depreciate the new improvements, upgrades or building expansion

Furniture, Fixtures, Equipment (FFE) and more:

The personal property of a hotel includes a building’s non-structural elements, exterior land improvements, and indirect construction costs.


  • Every room
  • Common areas
  • Parking Lots
  • Swimming Pools
  • Flooring
  • Decorative Lighting
  • Cabinetry
  • Electrical System
  • Plumbing System
  • Power Generators
  • Security Systems
  • Landscaping
  • Fountains


  • Building a new hotel/motel,
  • Acquiring an existing building,
  • Renovating an existing hotel/motel, or
  • Expanding a hotel/motel.


  • The IRS has issued an Audit Technique Guide (ATG) for IRS field agents and this guide spells out the process of a properly conducted cost segregation analysis.
  • Results of Lookback study allow the owner of properties purchased in previous tax years to benefit from cost segregation in the current tax year without filing amended returns.
  • Cost Segregation: Separating the structural and nonstructural building components into proportionate cost.
  • Structural components: include the building’s roof, walls, and foundation which depreciate over 39 years.
  • Non-structural components: can be depreciated over five years and include carpeting, molding, window coverings, security systems, and more
  • Property improvements: like curbing, paving, and striping


  • Properly is classified property so that more accurate depreciation schedules may be applied.
  • Maintains depreciation schedules in line with the real value of property items in real time.
  • The Cost Segregation Study may help reduce your property taxes by accurately removing specific items from the cost of the building, and correctly classifying them into the new depreciation categories.
  • We have also encountered situations where a cost segregation has been performed but was not completed properly allowing for full realization all of the possible benefits.
  • The study will identify and reclassify the components of the building using the 5, 7, and 15 year depreciation schedules.
  • Our reports will identify the depreciable basis of each building system along with the current replacement cost of each building system. This allows your tax professional to satisfy the ratio test to determine expense vs capital items. its accounting application.
  • Cost Segregation is a sure method to compliance under the new Repair Regulations.


  • And many in house tax accounting personnel are not fully prepared to deal with the complexity of the tax law and various sections regulations and rulings.
  • Many providers Assume or Estimate the percentage of the basis of your reclassification, we provide a highly detailed review.


  • Estimated percentage of reclassification of assets,
  • First year tax saving benefit (immediate)
  • Five year tax saving benefits
  • Net Present Value of those savings.


We stand strongly behind our work and will defend our cost segregation at no cost to you. Our engineers and tax experts perform cost segregation studies using the Modified Accelerated Cost Recovery System (MACRS), the method of depreciation mandated by the IRS. The MACRS is applied to short-life assets, which accelerates depreciation and reduces the tax burden of the property owner.


separating the structural and non-structural components of a building and accelerating the depreciation lives of the non-structural components