What is cost segregation and why do we utilize it?
At Gorrell Hughes Capital (GHC), we’re always seeking smart strategies that maximize asset value and drive long-term growth for our investors. One of our core financial strategies is cost segregation, a powerful tool for accelerating depreciation and improving cash flow across our owned properties.
Partnering with a qualified firm, GHC conducts engineering-based cost segregation studies that allow us to break down building components into shorter depreciation categories. Instead of the standard 27.5- or 39-year depreciation schedules, we can reallocate specific assets into 5-, 7-, or 15-year schedules, accelerating tax benefits.
This approach provides a significant boost to our cash flow by allowing us to depreciate items such as decorative building elements, electrical for dedicated computer equipment, and carpeting over 5 to 7 years. Other items, like landscaping, paving, and site utilities, are reclassified into 15-year schedules, optimizing tax benefits even further.
“The power of cost segregation lies in its ability to free up capital that can be reinvested into our properties and new acquisitions,” says John Gorrell, Co-Founder of GHC. “For us, it’s not just a tax strategy—it’s a catalyst that enables us to expand our portfolio, upgrade our assets, and deliver long-term value.”
Cost segregation is just one part of our comprehensive approach to financial optimization, helping us maximize the potential of our portfolio while reinvesting in our communities. This approach supports our mission to enhance returns and foster growth, benefiting investors and residents alike.
About Gorrell Hughes Capital
Gorrell Hughes Capital, LLC (“GHC”) is a privately held real estate investment company founded by John Gorrell and Jeff Hughes. GHC is solely focused on acquiring Class B multifamily workforce housing, targeting both long-term hold and value-add opportunities. GHC principals are personally co-invested in GHC deals and, with 60+ years of experience, we have established a broad network of investors and investment opportunities.
For more information on Gorrell Hughes Capital and our latest projects, please visit our website at www.gorrellhughes.com.