Cost Segregation and Self-Storage Properties…Reduce Federal Income Taxes. Increase Operating Capital.
Use the calculator on the right to estimate your savings or complete the form below to request a free no-obligation estimate of tax savings for your property.
A typical self-storage unit averages 25% – 35% of its improved value as short-life property, which generates higher annual depreciation and reduces federal income taxes. Cost segregation studies minimize ordinary income to maximize return of capital and/or capital gain related distributions. They also create flexibility to achieve various operational objectives.
Benefits of Cost Segregation
- Decreases a self-storage facility’s income taxes, allowing the owner to invest the savings in capital improvements, reduce debt or simply improve cash flow.
- Provides immediate reduction in federal income tax through increased depreciation.
- Defers taxes on gains to a lower rate.
IRS Guided. Cost segregation is a conservative, IRS defined approach implemented by O’Connor & Associates’ professional real estate appraisers to update depreciation schedules for correct component allocation. Utilizing appraisal specialists allows our clients to realize considerable cost efficiencies. Our fees are typically one-half those charged by non-appraisal firms for comparable properties.
How Do We Work With Self-Storage Properties?
After a careful review of your entire property by one of our expert appraisers or cost segregation advisors, we identify the amount of five, seven and 15-year property components you have, apply the various depreciation schedules to each and calculate the new depreciable amounts. Selected components are in accordance with the IRS Audit Techniques Guide. A typical self-storage unit averages 25% – 35% of its improved value as short-life property, which generates higher annual depreciation and reduces federal income taxes.
A list of common short-life items for self storage property as defined by the IRS Audit Techniques Guide include:
|5-Year Property||15-Year Property|
|Removable flooring (vinyl, carpeting, wood)||Parking lot/asphalt paving|
|Selected cabinetry||Parking lot striping|
|Special ventilation||Site work|
|Vinyl/wood wall coverings||Landscaping|
The O’Connor & Associates’ Difference
- Leader in “look back” studies.
O’Connor & Associates is the industry leader in “look back” studies having done more studies benefiting from Section 481a than any other boutique firm in the nation. Commercial appraisal is a core competency of our firm with extensive expertise in defining property values across dozens of land uses. We can establish and analyze a cost basis, even when such details are not available from original construction documents
- We don’t “over-engineer”.
O’Connor & Associates combines the right balance of tax, accounting, valuation and real estate expertise without “over-engineering” what the IRS requires. This balance is reflected in our solidly competitive fees
- Fast turnaround.
O’Connor & Associates’ project turnaround is 4-6 weeks. Under special circumstances, it can be as short as 10 business days. This reflects our flexibility, customer focus and a well-tuned business process for generating cost segregation studies.
- Use of property appraisal experts.
O’Connor & Associates streamlined our approach so your team is contacted by only one professional who collects information and coordinates technical requirements related to documentation, site visits, clarifications, etc.
- The O’Connor & Associates goal is to be upfront, honest and handle our client relationships with the utmost integrity. We know how important that is in today’s business environment.
In addition to cost segregation studies, O’Connor & Associates also provides appraisal services for lenders and developers of self-storage facilities and commercial property tax reduction for self-storage owners.
Request a free no-obligation estimate of tax savings for your property by completing the form to the right