Client Background
A self-storage facility owner with two locations totaling 120,000 square feet wanted to minimize tax liability after a major expansion. The client hired Development Theory to do a cost segregation study.
The Challenge
Long-Term Depreciation on Storage Units: The entire facility was being depreciated over 39 years, delaying tax benefits.
Significant Site Improvement Costs: Expenses such as security systems, fencing, paving, and lighting weren’t optimized for depreciation.
High Initial Tax Liability Post-Expansion: The recent expansion had increased revenue but also triggered a high tax bill.
Our Approach
Detailed Breakdown of Storage Facility Components: Identified assets such as security cameras, climate control units, and electronic gate systems for accelerated depreciation.
Reclassification of Land Improvements: Shifted paved surfaces, fencing, and landscaping into 15-year depreciation schedules.
Maximized Bonus Depreciation: Applied 100% first-year depreciation to eligible assets, significantly reducing taxable income.
Tax Strategy for Future Expansion Plans: Developed a depreciation plan to optimize future facility expansions.
Financial Forecasting for Investors: Provided a cost-benefit analysis to help attract new investors.
The Solution
Reclassified $2.7 million of assets into faster depreciation categories.
Applied bonus depreciation, maximizing first-year deductions.
Ensured long-term tax savings, reducing taxable income over time.
Results & Impact
Saved $1.1 million in taxes in the first year, boosting cash flow.
Improved return on investment, attracting new investors.
Deferred tax liability, allowing reinvestment into a third location.
Owner’s profitability increased, making future expansion easier.
Client Feedback
"This strategy turned my tax liability into an opportunity to reinvest and expand my business faster than planned!"
Development Theory Can Help Business Owners Like You
Are you leaving money on the table with slow depreciation? A Cost Segregation Study can accelerate your tax deductions, improve cash flow, and free up capital to reinvest in your business. Whether you own commercial real estate, a rental property, or a specialty facility, our team at Development Theory helps business owners maximize tax savings while staying IRS-compliant. The best time to conduct a study is within the first few years of property ownership or after major renovations—don’t wait to take advantage of these savings.
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