Lindon Engineering Services, Inc.

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DEPRECIATION TREATMENT OF SELF-STORAGE FACILITIES

cost segregationBy: Larry Miller

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 s

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