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Cost segregation benefits self-storage facilities by increasing cash flow through accelerated depreciation.
Cost segregation is not new. It has been in existence since 1954 when the IRS allowed for certain personal assets to be accelerated into a shorter life class. However, it wasn’t until Hospital Corporation of America sued the IRS in 1997 and won that the IRS revisited the issue of accelerated depreciation. Subsequently, after the Tax Act of 2004, the IRS’ chief counsel issued a memo stating that “…cost segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated.” Continue reading>>>