On December 28, 2015, Congress extended the 50% bonus depreciation for all new commercial real estate construction projects and additions to existing facilities that are put “in service” in both the 2016 and 2017 tax years in a further attempt to stimulate the American economy. In addition, this new law established bonus depreciation for new commercial construction of 40% in 2018 and 30% in 2019. It is then discontinued.
In a typical self storage facility, the depreciation may be accelerated from 20% to 40% of the straight-line 39 year tax life property to either five or 15 year tax life. If, between 2008-2017, the facility is newly constructed in one year the 50% bonus depreciation was allowed which leads to significant tax savings. To meet these federal guidelines, identify all building components that qualify for less than 20 year tax life and receive the 50% bonus depreciation in the first year without profit requirements.
For example, a $2,000,000 self storage facility would see $400,000 to $800,000 in five or 15 year life. These assets would qualify for 50% bonus depreciation if they were put into service in a year that bonus applied. This would result in $200,000-$400,000 in immediate tax savings benefit.
In the competitive self storage business environment that exists today, this represents a major tax savings benefit that no one can afford to miss.
Cost Segregation Services, Inc. (CSSI) is the IRS compliant engineered-based study solution that qualifies and substantiates the application of the 50% bonus depreciation for the first year the facility is put “in service.” The CSSI study identifies all the building components that qualify for less than 20 year tax life and receives the 50% bonus depreciation in the first year without profit requirements.
To inquire, send the following information to email@example.com or call 972-333-5059 to receive a free/no obligation estimate of your tax savings in 2 to 4 business days:
-New facility cost basis (new construction additions to existing facilities qualify)
-Date “in service” or expected date for new projects
This will allow you and your CPA or Tax Professional to make a well informed business decision and can be used as a tax planning tool going forward. It is your money and CSSI is the IRS compliant solution to find out if you qualify to put it into your self storage business