Self-Storage Acquisition Cost Segregation

[Tim Soto]

I'm currently in escrow on an under-performing self storage property in CA. I heard about using Cost Segregation when purchasing it to maximize on the tax benefits. I'm going to consult with my CPA, but just wondering if anyone has had experience with this? When would I need to have a Cost Segregation Analysis done, during escrow? Or what questions should I ask my CPA? I can't wait to share the details of this deal once it closes. Thoughts and comments are greatly appreciated.

Thanks,

Tim 

[Vincent Polisi]

@Tim Soto:

Very smart of you to even know about this much less be ready to implement it. In certain situations, it can create positive cash flow immediately from an otherwise negative cash flow "investment". 

Personally, due to the expense, I would't order the Engineering Study until AFTER you've closed to ensure nothing happens that prevents you from closing. 

You're going to want to talk to someone who actually does the Engineering Study to determine which items you're purchasing meet the requirement for accelerated depreciation. 

Your CPA may or may not know. Generally speaking, you're going to want the Engineer and your CPA to collaborate to maximize the depreciation and maximize your benefit. 

Here's an article that relates directly to Cost Seg on self storage facilities that may be of some help