Cost Seg Building

A Blog About Tax Savings for Building Owners

Author: John Murphy (Page 1 of 13)

Husband of 34 years to my college sweetheart, Janet Murphy (@janetmurphydesign on Instagram). Together we have 6 wonderful children from ages 15-31 and 5 grandchildren. I've been a licensed REALTOR since 2003 and broker since 2007. I also am a cost segregation specialist helping building owners and real estate investors maximize their tax deductions, save thousands on their income taxes and increase their cash flow. If you're a building owner you probably haven't done a study...let's connect. There is no obligation. We can run an estimate for you and really every building should be evaluated if the basis is over $150,000. I can work all over the country and not just here in the Upstate. We relocated to Greenville, SC for the lifestyle, lower cost of living, amazing amenities in the area and the growth opportunity for business and real estate. We absolutely love it here!

All opinions are expressly my own and do not represent either eXp Realty LLC, Cost Segregation Services, Inc. or any other company, organization or group that I might be affiliated with.

Unlock Hidden Value in Your Bank Building: The Tax-Saving Power of Cost Segregation

December 19, 2024 / / 0 Comments
Banks buildings perform well with cost segregation

Owners of bank buildings and branches are prime candidates for cost segregation studies because of the significant tax savings and financial advantages it can provide. It’s important to get a cost segregation study done so you have all the building components and systems identified. This is the case whether you continue to operate it as a bank or if you are repurposing the building. I have come across a lot of older bank buildings that are often being used as office space for a new tenant or owner.

Bank buildings are particularly well-suited for cost segregation studies. Their specialized design and features often qualify for accelerated depreciation, especially within the 5-year property class life. There are numerous specialty components that are unique to banking that offer valuable depreciation benefits.

Here are some key components and systems to identify for shorter class lives:

  • Specialty electrical and plumbing systems
  • Drive-up windows
  • Interior glass windows
  • Pneumatic tube systems
  • Night depositories
  • Safes and safe deposit boxes
  • Vault doors

Even if you’ve converted a bank building into more traditional office space, many of these specialty items often remain. Reclassifying these assets to their proper 5-year lives, rather than leaving them as 39-year assets, can yield substantial tax savings. Additionally, if you end up removing some of these systems, if you have identified them, you might be able to take a partial asset disposition which would yield another excellent tax deduction.

Nationwide Service with Local Expertise

While I’m based in Greenville, SC, I study buildings like this all over the country. Whether your property is here in the Carolinas or across the country in California, it costs no more to engage my services. Our nationwide network of professional photographers ensures we can efficiently document your property to provide an accurate and thorough cost segregation analysis. The firm I represent, CSSI Services, works nationwide in all 50 states and we work on all types of buildings.

Let’s Talk

If you own a bank building—or any commercial property—and want to explore the tax-saving opportunities of cost segregation, give me a call. I’m happy to provide a no-cost, no-obligation estimate for your building. It’s a simple way to uncover hidden value and improve your bottom line.

John Murphy CSSI

Amazon Spends $12 Million on 104 Acres to Develop a Warehouse in Fountain Inn

December 19, 2024 / / 0 Comments
Amazon Closed on 104 acres in Fountain Inn, SC.

There has been lots of news of late about Amazon expanding in the Upstate of South Carolina. The Greenville County Council voted to approve the fee in lieu tax incentive to give them a break for the next 10 years as long as they do what they say they are going to do.

It’s expected that the warehouse will employ more than 200 people. The Post & Courier is reporting that Amazon will spend more than $47.5MM on the project. I don’t know if that includes the $12,638,960 to purchase the land.

I happened to be going through some closed sales information and saw that Amazon closed on the 104 acre parcel located just outside the City of Fountain Inn’s city limits. It’s right off of I-385 and Fairview Road Extension. It’s a great location. I’m not sure what the plans are to possibly modify that exit and entrance ramp there but it needs some help. It’s almost like it’s an after thought. I was down there the other day at 4pm and it sure seemed like a great place for possible accidents on the interstate as people try to take that short little exit that is often congested at that time of day.

QuikTrip on Woodruff Road Sold $6.485 Million

November 17, 2024 /

QuikTrip at 1460 Woodruff Road, Greenville, SC just sold for $6,485,000 to an entity named JICO LLC.

QT’s are well loved here in the Upstate of South Carolina and this store does some great business. It’s right in the heart of the retail shopping area known as Woodruff Road. There are 145,000 vehicles per day that travel along Woodruff Road. It’s quite remarkable.

Worth noting, there was a brand new 7-Eleven that was just built a couple of blocks away from this QT. That 7-Eleven sold in August of 2024 for $6,550,000.

If you have not experienced a QT yet, please be sure to check them out.

Discover the Green Zip Tape Advantage: Sustainability and Tax Savings That Last

November 12, 2024 /

Green Zip Tape is transforming the construction industry, and it’s only a matter of time before developers, investors, and property owners recognize it as the smarter, greener way to build. Not only does Green Zip Tape offer a more environmentally friendly approach to construction, but it also provides unmatched tax advantages that extend through the building’s life, benefiting owner after owner, year after year.

The Environmental Benefits

With Green Zip Tape, less sheetrock ends up in landfills—an impactful step toward reducing construction waste. This patent-protected tape also enables easy access to internal walls for repairs, making maintenance smoother and renovations faster, cheaper, quieter, and cleaner. It’s an innovation in sustainable building that truly minimizes environmental impact.

Maximize Financial Benefits Through Cost Segregation

The financial benefits of using Green Zip Tape are substantial. Imagine shifting approximately 10% of your project’s construction costs from the typical 27.5- or 39-year depreciation class life to a much shorter 5-year class life. For example, in a $30 million multi-family project, $3 million could be reclassified to the 5-year category, creating a significant tax advantage, even if 100% bonus depreciation isn’t renewed in 2025.

In practical terms, that $3 million reclassification translates to approximately $1 million in tax savings. Whether those savings are realized in the first year or over five years, this reclassification is a bonus on top of what you’ll get from a cost segregation study. You’re building a better building that will be able to carry on to future owners. These advantages transfer to new building owners, enhancing the building’s value and market appeal over time.

Still Deciding? Let’s Run the Numbers

If you’re considering Green Zip Tape for your project, the best way to see its value is to let us calculate the potential savings. Our team can provide a detailed analysis to help you make an informed decision.

Green Zip Tape is for Larger Projects

Green Zip Tape is currently available for projects over $10 million with significant sheetrock requirements on non-load-bearing walls. Ideal applications include multi-family, hospitality, office, student housing, senior housing and office-to-residential conversions.

I represent Green Zip Tape nationwide and am here to discuss how it could benefit your next project. Reach out today for a consultation!

#greenziptape #buildbetter #taxbenefits #sustainability #sustainableconstruction #greenbuilding #drywall #sheetrock #environmentallyfriendly

John Murphy CSSI

179D Tax Loophole – Buildings Started in ’21-’22 and Completed in ’23-’24 Might Qualify for $5/SF Deduction

November 12, 2024 /

Building Owners: if you started construction on a new building in 2021 or 2022 and it got completed in 2023 or 2024, it’s quite probable that it might qualify for up to $5/SF 179D Energy Efficiency Tax Deduction. This is what we call a sweet spot. Others migth call it a loophole. There’s a gap in the tax code so that you don’t have to qualify for the new highly restrictive apprenticeship rules or the prevailing wage rules.

If your building is 40,000 SF it might qualify. All kinds of buildings might qualify…strip centers, industrial, office, multi-family 4 stories or more, senior housing, student housing etc. If a public building was built or a non-profit (i.e. church, YMCA, school, library etc) this deduction might be able to be taken by one of the design firms. This is one of the craziest tax deductions in the history of mankind so you should check it out if you are a designer or architect.

What does this translate into? Well, let’s say you built a 50,000 SF industrial building / flex building. If you get $5/SF that’s a $250,000 tax deduction. The other point is this comes off the 39 year class life line…we’re all used to taking the 5 and 15 year life but this is 39 year. It’s a BIG DEAL.

Here’s the other qualifier…you have to be the one who built this or had it built by a contractor. This does not work if a developer built a spec building and immediately sold it. The deduction doesn’t work for the developer and it doesn’t work for the next owner. So if you are building and developing for your own use or investment, this is an incredible deduction for you. How many people are taking this deduction? Not a lot.

Let me know if you have a building and would like us to evaluate it. We study these kinds of properties like with do with cost segregation.
hashtag#179D hashtag#sweetspot hashtag#taxdeduction hashtag#newconstruction hashtag#commercialbuildings hashtag#multifamily

John Murphy CSSI

Trinity Partners, Commercial Real Estate Brokerage, Expands in Greenville, SC

November 12, 2024 /
Photo: Trinity Partners Greenville, SC

The thing with real estate is that it might be the ultimate entrepreneurial business. I know a number of these folks who have launched the Greenville, SC brokerage for Trinity Partners. Trinity Partners is established in Charlotte, Raleigh, Columbia, Atlanta and now Greenville, SC.

It’s hard to go wrong with brokers here in the Upstate of South Carolina. There are many of them. The folks who started this brokerage under the umbrella of Trinity Partners were successful young brokers at a couple of other brokerages here in the Upstate. They now offer a full service brokerage firm including property management services.

I wish them all well as they launch out on their own to build their own opportunity in commercial real estate brokerage. The Upstate Business Journal has a good article about Trinity Partners Greenville and how they continue to grow this real estate brokerage.

A Blueprint for Growth: Bold Tax Reforms to Drive Stability, Investment, and Opportunity Across America

November 9, 2024 /

Reforming Tax Policy: Ideas for Stability and Growth

On Tuesday, November 5th, the American people voiced their support in a powerful way, placing control of all branches of the federal government in the hands of the Republicans under President Trump. As the new administration prepares to take office, a critical tax policy change looms: the expiration of the Tax Cuts and Jobs Act (TCJA) at the end of 2025. With tax reform on the agenda, I have some ideas that I believe would bring stability, encourage investment, and help revitalize struggling areas.

1. Make 100% Bonus Depreciation Permanent

The current policy of gradually phasing out bonus depreciation by 20% each year until it hits zero in 2027 is creating uncertainty. Instead of this cycle of temporary extensions and percentage adjustments, Congress should establish 100% bonus depreciation as a permanent feature of the tax code. This policy gives investors, developers, and business owners the confidence they need for long-term planning. Locking in 100% bonus depreciation would encourage investment, drive development, and spur economic growth, especially in underdeveloped areas. Congress has an opportunity to pass this legislation in early 2025, making it retroactive to 2024 so taxpayers can benefit immediately.

2. Fix the R&D Tax Credit

The Research & Development (R&D) Tax Credit needs an overhaul. Currently, the amortization requirement penalizes American businesses by forcing them to spread out deductions over five years instead of allowing a full deduction in the first year. Get this corrected for the 2024 tax year.

3. Capital Gains Tax Relief for First-Time Homebuyers

On the residential side, we need policies that increase the availability of homes for first-time buyers. One potential solution: allow investors who sell rental properties to first-time homebuyers to bypass capital gains and recapture taxes on the sale. By doing so, we could open up more housing inventory and make homeownership more accessible to younger generations. This concept, inspired by my friend and colleague Craig Kamman, offers a practical approach to addressing housing supply and affordability.

4. Update the Capital Gains Exemption for Homeowners

The current capital gains exemption for homeowners—$250,000 for individuals and $500,000 for married couples—has been in place since 1997. Given the significant increase in housing prices over the past two decades, these thresholds no longer reflect today’s real estate market. Adjusting the exemption to $1 million for individuals and $2 million for couples would reflect current home values, reduce tax burdens for sellers, and better align with housing inflation.

John Murphy

Maximize Your Tax Savings Why Building Improvements in 2024 Should Be Cost Segregated

November 7, 2024 /

**Maximizing Your Tax Savings on Building Improvements** 

Let’s talk briefly about the tax benefits you might be missing out on with your building when spending money for tenant or capital improvements. If you did a $375,000 tenant improvement or capital improvement to your commercial building in 2024 and are not doing cost segregation, you’re likely overpaying your income taxes by $10,000 to $15,000 over the next five years.

Today, most of these improvements go unstudied, leaving building owners with significant, unclaimed tax savings. Typically, CPAs will record improvements as “qualified improvement property” (QIP) with a 15-year class life, which allows for 60% bonus depreciation. While that’s within the tax code, this approach often overlooks substantial five-year property within the improvements, which could yield faster and more significant tax deductions.

**Why a Study Makes Sense** 

When improvements are carefully studied, a sizable portion (15–50%) can often qualify as five-year property. For example, a $375,000 improvement could yield 30-40% in five-year property. Without a study, you miss the opportunity to accelerate your deductions and enhance your cash flow.

Consider this example: 

– If a study costs around $3,500, your net tax savings start showing by year two. By year five, you could be ahead by $10,000 or more.

– Even with a conservative outcome of 25% five-year property, your savings could be around $6,000 over five years; at 50%, you might save $15,000.

These are potential savings you’re leaving behind if you simply default to the QIP classification without a study.

**Optimize Your Investments** 

This isn’t just about tax savings; it’s about making the most of every dollar you invest in your property. Those savings could fund more improvements, support business growth, or even personal goals.

**Let’s Get Started** 

I’m John Murphy with CSSI. I’ve developed a custom calculator to help building owners and CPAs understand the real potential of cost segregation on improvements. I work nationwide, and with our network, I can handle projects in all 50 states efficiently, without incurring travel costs. So while I’m in the Southeast, I can study buildings across the rest of the country and it does not cost you more money. If you did improvements in 2024 that were more than $200,000, call me for a conversation. There’s no cost or obligation. I can run the numbers for you and you can see how this might help you.

Let me ask you this…and I don’t care how much money you have…if you knew that there was $10,000 that could be in your bank account over the next few years but instead is sitting there in the government’s IRS accounts, wouldn’t you want your money?

Learn more on my blog at www.costsegbuilding.com, and connect with me on LinkedIn or social @costsegbuilding. Let’s discuss how a study could benefit your next project and help you maximize your building’s tax efficiency.

John Murphy, CSSI / 864-276-1448 / john.murphy@cssiservices.com

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