Study Overview
This case study examines a Self-Storage property acquired in 2025 for $632,800 and applied in the 2025 tax year.
By also leveraging 100% bonus depreciation, the cost segregation study reclassified eligible building components into shorter recovery periods, maximizing upfront tax savings resulting in $70,573 in savings.
| Property Type | Self-Storage |
| First-Year Tax Savings | $70,573 |
| Date Placed In-Service | Jan. 2025 |
| Tax year study applied | 2025 |
| Bonus depreciation | 100% |
| Purchase price(less land) | $632,800 |
| Accelerated Method | $265,794 |
| Straight-Line Method | $75,056 |
| Increased Deduction | $190,737 |
| Tax Rate | 37% |
Project Overview
A self-storage owner completed a cost segregation study, identifying assets eligible for accelerated depreciation. Through a detailed engineering analysis, a significant portion of building costs were reclassified from a 39-year depreciation schedule to much shorter recovery periods, putting money back in the owner’s pocket sooner.
Study Results
The detailed engineering analysis successfully reclassified a whopping 34% of the total building costs into accelerated depreciation categories:
*Also refer to “Building Allocation After Study” Graph Below
Key Reclassified Assets
5-Year Property ($63,280) included:
- Automated gate systems
- Access control systems
- Office furniture, fixtures, and millwork
- Signage
- Security and surveillance systems
15-Year Land Improvements ($151,872) included:
- Parking lots, driveways, and access roads
- Perimeter fencing
- Gate structures and entry/exit infrastructure
- Outdoor and security lighting
- Landscaping and irrigation
Building Allocation After Study
5-Year
$63,280 Re-allocated
15-Year
$151,872 Re-allocated
39-Year
$417,648 Re-allocated
Financial Impact
By accelerating depreciation on $632,800 of the property’s cost basis, the study generated substantial first-year tax deductions and meaningfully improved cash flow. Through the identification of personal property and land improvements, the owner was able to take advantage of:
- Bonus depreciation eligibility on qualifying assets
- Accelerated depreciation schedules on shorter-life property
- Enhanced cash flow through reduced tax liability
- Proper cost basis documentation for future disposition analysis
Building Systems Documentation
The study also included thorough documentation of the property’s building systems, a valuable resource for making informed capitalize-vs.-expense decisions in line with IRS Tangible Property Regulations. This documentation gives property owners:
- Current replacement cost benchmarks for each building system
- Detailed asset inventories by depreciable life
- Support for partial disposition elections on future improvements
- Compliance with IRC Section 1.263(a)-3 requirements
Compliance & Methodology
The study was conducted in full accordance with:
- IRS Revenue Procedure 87-56 asset classification guidelines
- Modified Accelerated Cost Recovery System (MACRS) regulations
- IRC Section 168 property classification standards
- Tangible Property Final Regulations (Treasury Decision 9636)
All asset classifications were supported by site inspection, architectural plans, construction documentation, and established engineering cost analysis standards designed to withstand IRS scrutiny.
Why This Matters
This case study illustrates how self-storage owners can unlock meaningful tax savings through a properly executed cost segregation study. By identifying and reclassifying nearly $632,800 in assets eligible for accelerated depreciation, the property owner captured significant first-year tax benefits, all while remaining fully compliant with IRS guidelines.
Ready to discover your property’s tax savings potential? Contact CSSI today.
