{"id":25696,"date":"2025-01-24T13:10:50","date_gmt":"2025-01-24T13:10:50","guid":{"rendered":"https:\/\/leyton.com\/us\/?post_type=white_paper&p=25696"},"modified":"2025-01-24T13:11:28","modified_gmt":"2025-01-24T13:11:28","slug":"self-storage-cost-segregation","status":"publish","type":"white_paper","link":"https:\/\/leyton.com\/us\/insights\/white-papers\/self-storage-cost-segregation\/","title":{"rendered":"Self Storage Cost Segregation\u00a0\u00a0"},"content":{"rendered":"
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Maximize Your Self Storage Building’s<\/mark><\/strong> Tax Strategy <\/h2>\n \n \n

What is Cost Segregation<\/mark><\/strong>
Cost segregation<\/mark><\/a> <\/strong>is an effective tax planning strategy that helps businesses and individuals involved in constructing, purchasing, expanding, or renovating real estate<\/strong> reduce their tax liabilities by accelerating depreciation deductions, which allows for the deferral of both federal and state income taxes.

Self Storage<\/mark><\/strong>
Although self-storage properties may seem straightforward, they can benefit from cost segregation by identifying components like paving, fencing, security systems, and climate control features. By accelerating depreciation on these assets, owners can reduce taxable income more quickly<\/strong>, improving cash flow and financial performance. This strategy helps maximize tax savings and enhances the long-term profitability of self-storage investments, providing capital for reinvestment in the business.
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Practical Example <\/h2>\n <\/div>\n
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This case study highlights the benefits of accelerated depreciation, showing how self-storage facilities with specialized infrastructure can optimize depreciation for tax efficiency, reduce taxable income, and improve cash flow, ultimately boosting financial performance.<\/p>\n <\/div>\n <\/div>\n

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Building information <\/mark><\/h3>\n

\u25cb <\/strong><\/mark>Building Type<\/strong> \ud83e\udc6a <\/mark>Self Storage
\u25cb <\/strong><\/mark>Property Type:<\/strong> \ud83e\udc6a <\/mark> Commercial
\u25cb <\/strong><\/mark>Building Size:<\/strong> \ud83e\udc6a <\/mark> 328,465 SF
\u25cb<\/strong><\/mark> Study Scope:<\/em><\/strong> \ud83e\udc6a <\/mark>New Build
\u25cb<\/strong><\/mark> Condition<\/strong>: \ud83e\udc6a <\/mark>New
\u25cb<\/strong><\/mark> Filling Year:<\/strong> \ud83e\udc6a <\/mark> 2023
\u25cb<\/strong><\/mark> Date Placed in Service:<\/strong> \ud83e\udc6a <\/mark> 2018
\u25cb<\/strong><\/mark> Purchase Price less Land or Total Construction Cost:<\/strong> \ud83e\udc6a <\/mark> $2,000,000
\u25cb<\/strong><\/mark> Tax Rate:<\/strong> \ud83e\udc6a <\/mark> 30%
\u25cb<\/strong><\/mark> Return on Investment Factor:<\/strong> \ud83e\udc6a <\/mark> 8%<\/p>\n <\/div>\n

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Summary of Benefits<\/mark><\/h3>\n

\u25cb<\/mark> 25% Additional Tax Deductions in First Year:<\/strong> \ud83e\udc6a <\/mark>$580,632

\u25cb<\/mark> RNPV Over Remaining Life of Property<\/strong>: \ud83e\udc6a <\/mark> $169,637

\u25cb<\/strong><\/mark> <\/em>Net Present Value (NPV) Over 10 Years:<\/strong> \ud83e\udc6a<\/mark> $178,006<\/p>\n <\/div>\n <\/div>\n\n <\/div>\n<\/section>\n\n

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Building Allocation After Study <\/span>\n <\/h2>\n <\/div>\n