Cost Segregation Analysis for a Self-Storage Facility in La Pine, Oregon

Narrative

In 2019, the owners of a self-storage facility in La Pine, Oregon engaged Engineered Tax Services (ETS) to perform a cost segregation study. The property consists of 6 single-story buildings originally constructed in 1975. The facility features metal construction with various improvements including security features, paving, and storage unit components.

Objective

The primary objective of the cost segregation study was to identify and classify the farm's assets to optimize the owners' tax savings. By breaking down and reallocating components into shorter depreciation life categories, ETS aimed to provide both immediate and long-term financial benefits through accelerated depreciation.

Start Your Cost Segregation Study Today!

Methodology

ETS employed a detailed, engineering-based approach, which included:

1. Physical Inspection: conducting a thorough site visit to identify and photograph the property's components
2. Document Review: examining architectural plans, construction documents and accounting records
3. Cost Analysis: applying engineering principles to allocate costs to specific asset classifications
4. Depreciation Calculation: calculating depreciation using IRS-accepted methods such as the Modified Accelerated Cost Recovery System (MACRS)

Asset Allocation

15-Year Class Life

Total Depreciation Allocation: $132,156.40 Percentage of Total Depreciable Basis: 25.58%

15-year class life assets identified in this study include:

• Chain link fencing
• Bollards
• Monument signage
• Access gates
• Aggregate paving

39-Year Class Life

Total Depreciation Allocation: $384,495.60 Percentage of Total Depreciable Basis: 74.42%

39-year class life assets identified in this study include:

• Building structure
• HVAC systems
• Electrical systems
• Plumbing
• Storage unit doors

Class Life Details:

Summary

The cost segregation study successfully identified significant opportunities for accelerated depreciation through the reclassification of assets. By segregating 25.58% of the depreciable basis into 15-year property, the property owner achieved substantial tax savings and improved cash flow in the early years of ownership. The engineering-based approach ensured compliance with IRS guidelines while maximizing allowable tax benefits.