I get asked this question quite a bit….is “this – insert building type or address” particular building a good candidate for cost segregation? And so I also hear this with Dollar General Stores. They are pretty basic. Generally if they are stand-alone buildings they are metal buildings with not a lot of finishing. That said, almost every commercial building that is profitable and has enough basis is usually worth studying. Dollar General Stores are no different.
I recently studied a couple of them for an owner recently and the studies turned out great for the owner. Every building is different of course but in general we might see about 5-6% of the cost be identified as 5 year class life and 10-20% identified as 15 year depending upon the size of the parking lot. The two I completed recently had the 15 year land improvements come back at 16 and 18%. That is significant especially given that 15 year can be taken as bonus depreciation. Remember, property eligible for bonus depreciation is those with class lives of 20 years or less. When we do our studies, we identify 5, 7 and 15 year property. For the tax year of 2023, if a building went intok service in this particular year bonus is 80%. (Note: Congress is currently considering revising this to take bonus back up to 100% at least through 2025 is what I’ve read).