One of the more surprising results we have experienced in the performance of a cost segregation study is that associated with self-storage facilities. On the surface, these monolithic structures appear to be nominally depreciated as real property and subject to 39-year, straight-line depreciation treatment; however, a deeper inspection may find as much as 40% or more of the assets can be depreciated on an accelerated basis thus providing a significant cash flow for the owner in the early years of the cost recovery cycle.
For example, site improvements can be recovered over a 15 year period commonly known as Asset Classification 00.3. What makes the self-storage facility so attractive for a cost segregation study is the large percentage of site work that is required as compared to the overall cost of the building itself. Site work which includes asphalt paving & striping, concrete sidewalks, curbing and equipment pads, concrete pavers, fencing and gates, underground storm sewers, underground utilities, landscaping and irrigation, etc. has been specifically identified by the IRS in publication 946 as assets that can be properly recovered over a 15 year period rather than real property known as Section 1250 property such as buildings or building components that can only be recovered over longer periods up to 39 years.