Car Wash Cost Segregation Case Study
No Cost Segregation Study
Total Depreciation
$38,051
Cost Segregation Study
Total Depreciation
$2,374,388
5 Year Assets
15 Year Assets
39 Year Assets
Total Tax Benefits
$700,901
Property Type
Commercial
Project Type
Car Wash
Building Cost
$2,374,388
Square Feet
4,420 SF
Lot Size
1.42 Acres
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Why is Cost Segregation Beneficial to
Car Washes?
Shorter Life Assets
Car washes typically have specialized equipment, such as conveyor systems, wash bays, drying systems, and water treatment facilities.
Cost segregation allows for the identification and reclassification of these assets to shorter depreciable lives (e.g., 5, 7, or 15 years), resulting in accelerated depreciation.
This can lead to higher tax deductions in the early years of ownership, providing immediate cash flow benefits.
Water Treatment & Recycling Systems
Many modern car washes invest in water treatment and recycling systems to comply with environmental regulations and reduce water usage.
The costs associated with these systems can be segregated and depreciated more rapidly, providing tax benefits.
Renovations & Upgrades
Car washes may undergo renovations or upgrades to stay competitive and comply with changing industry standards. The costs associated with these improvements can be segregated and depreciated more quickly, leading to immediate tax advantages.
Land Improvements
Car wash facilities typically include outdoor areas, driveways, and landscaping. Cost segregation can help differentiate and accelerate the depreciation of these land improvements, leading to additional tax savings.
Technology & Control System
Car washes often rely on technology for automated control systems, payment processing, and monitoring.
The hardware and software associated with these systems can be identified and reclassified for accelerated depreciation, aligning with the shorter life cycle of technology assets.
Building Components
Car wash buildings often have components that can be segregated for accelerated depreciation.
This includes elements such as lighting fixtures, HVAC systems, flooring, and other interior finishes. By identifying and reclassifying these components, car wash owners can optimize tax benefits.