Cost Segregation Can Benefit Your Self-Storage Facility

If you are a self-storage owner, cost segregation is a vital tax tool that you can take advantage of today. A cost segregation study has the potential to put more money in your pocket than most other business tools. The Engineered Tax Services team has helped hundreds of self-storage facility owners increase their cash-flow by accelerating depreciation through cost segregation studies.

It can benefit self-storage facilities in several different ways. When a cost segregation study is performed, it identifies all building components and site improvements qualifying for accelerated depreciation. Cost segregation can help lower property and insurance premiums, as well as real estate tax bills. Another great benefit is that a cost segregation study ensures accurate identification of assets in the case of theft or fire.

What is a Cost Segregation Study?

A cost segregation study is a cash-flow strategy to uncover potential tax savings through the reclassification and depreciation of property – such as a self-storage facility. It is a federal income tax tool that utilizes shorter recovery periods to accelerate the return on capital from property investments. Whether newly constructed, purchased, or renovated, the components of your building may be properly classified into these shorter recovery periods for computing depreciation. The study carves out certain qualifying portions of your building into 5, 7, and 15-year class lives that are normally buried in 27.5 or 39-year class life categories. A cost segregation study is not only beneficial for newly constructed buildings but can also uncover significant tax benefits for older buildings due to catch-up depreciation.

How Engineered Tax Services Does It

An example of how Engineered Tax Services has saved self-storage facility owners thousands of dollars with a cost segregation study is when the qualified engineering team performed a study and review of a 46,400-sq. ft. storage facility and 62,000 sq. ft. parking lot in Hobe Sound, Florida. The benefit from this ended up being a combined 29.08% reclassification of 39-year depreciation class life assets in to 5 and 15-year class lives – resulting in an accelerated benefit of $837,879.33 in total realized tax savings.

Request a Free Benefit Analysis to identify an estimated benefit and ensure a cost segregation study makes sense for your self-storage business below.

To learn more about cost segregation studies, call Engineered Tax Services at (800) 236-6519.

Author

Engineered Tax Services

Engineered Tax Services

Recent Posts

cost segregation for hotels

How Cost Segregation for Hotels Drives Profitability

In the hospitality industry, every strategy that leads to operational efficiency and financial stability is worth exploring. Among these, cost segregation stands out as a beacon for hotel owners. Hotels encompass a wide array of assets—ranging from luxurious furnishings to advanced kitchen equipment—all of which depreciate at different rates. Harnessing the power of cost segregation

Read More »

Can You Amend a Tax Return to Take Bonus Depreciation?

Let’s face it, no one wants to pay more taxes than they absolutely have to, especially when every dollar counts towards your business’s growth and stability. One often-overlooked tax savings opportunity is bonus depreciation, an IRS-approved tax strategy that allows you to deduct a large portion of asset costs in the first year. If you’ve

Read More »

179D vs. 45L Tax Credits: A Comparative Look at Energy Tax Incentives

When it comes to making homes and buildings more energy efficient, tax credits and deductions can provide helpful financial incentives. Two major options are the 179D tax deduction for commercial buildings and the 45L tax credit for residential properties. But how do these two programs compare? Let’s take a closer look. The Core Idea The

Read More »

Contact Us