Self-Storage Cost Segregation Studies
When it comes to cost segregation, self-storage facilities see some of the highest benefits. Packed to the gills with short-life depreciation components, self-storage offers a grand chance for property owners to reduce their income taxes by using depreciation from property they already own. Storage units, offices, and other interior areas are a bountiful source of such savings.
There are plenty of options to explore on the exterior as well, including driveways, lighting, parking, exterior units, signage, landscaping, and more. O’Connor can help you find short-life and long-term depreciation across the entirety of your property. This will guarantee that your cost segregation report uses valid methods, true evidence, and meets all other IRS guidelines.
No matter the size of your business, cost segregation can save you serious money on your income taxes. For self-storage, the cost of a study is usually returned in the first year, often at a ratio of 20-1. Depending on the size of the facility and additions like bonus depreciation, this number can be bumped even further. Consult the following table to see how you measure up to other businesses that O’Connor has already helped.
| Depreciable Basis | Purchase Date | Year of Study | 1st Year Additional Depreciation | 1st Year Tax Savings | Year 1 Payback | Initial 5 Years Tax Savings | 5 Year Payback |
|---|---|---|---|---|---|---|---|
| $865,145 | 12/01/14 | 2014 | $9,919 | $3,928 | 1.3:1 | $60,261 | 20.1:1 |
| $1,304,722 | 12/01/08 | 2014 | $189,314 | $74,968* | 25.0:1 | $85,094* | 28.4:1 |
| $1,819,200 | 05/01/15 | 2015 | $48,415 | $19,172 | 6.4:1 | $97,386 | 32.5:1 |
| $2,535,000 | 04/01/14 | 2014 | $59,829 | $23,692 | 7.9:1 | $127,647 | 42.5:1 |
| $3,759,650 | 12/01/13 | 2014 | $354,539 | $140,397* | 46.8:1 | $313,058* | 104.4:1 |
Results
* Results from “Catch Up” studies which allow the owner of properties purchased in previous tax years to benefit from cost segregation in the current tax year without filing amended returns.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.
