The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
In self storage commercial properties cost segregation is often times more important than paying close attention to keys in the tax code. Cost segregation alongside cash flow and smart operational management is often enough without even considering different areas of tax code to navigate.Â
Richard Wilson: For self storage commercial properties, are there any special tax credits or areas of the tax code that you guys navigate? Or is it simple cost segregation in many cases that you guys do? Or what does that look like?
John Manes: Simple cost segregation is what we do. I’d hate to give you like a one word answer, but that’s the answer.
Richard: That’s what I thought, that’s what I thought. Okay, cool. I’m not the expert there, so I’m just making sure I wasn’t blind to something else that was special about the space. But I’m guessing with a good NOI on a property, you get a pretty good 25 to maybe 30% on a write off that first year under depreciation with those studies I would guess typically, right?
John: Right, yeah, and you’re getting cash flow at the same time, and then negative K1 which is a beautiful thing about our tax code.
Richard: For sure.
