Welcome back! Ask questions, get answers, and join our large community of tax professionals.
  • Sign In
  • Elevate 2026 Pencil Banner
    cancel
    Showing results for 
    Search instead for 
    Did you mean: 

    Storage Unit

    MGC94
    Level 7

    Taxpayer owns a storage unit (sch C) 

    He added a new building to it to hold more units 

    The cost of the building was $46,671. Taxpayer put down a deposit of in March of $5,500. He paid the remaining balance in June.

    What is the best way to take this write off or correct way? 

    Thank you for your help...  

     

     

    0 Cheers
    1 Best Answer

    Accepted Solutions
    IRonMaN
    Level 15

    You start depreciating the asset once it is actually put into use.


    Slava Ukraini!

    View solution in original post

    8 Comments 8
    IRonMaN
    Level 15

    You start depreciating the asset once it is actually put into use.


    Slava Ukraini!
    MGC94
    Level 7

    @IRonMaN J1 - 39/40 nonresidential/commercial real estate?

    0 Cheers
    IRonMaN
    Level 15

    Yes


    Slava Ukraini!
    BobKamman
    Level 15

    1) You start depreciation when it is available for use. 

    2) Storage units can qualify as “tangible personal property” under the U.S. tax code because they are considered movable and not permanently attached to the land. This classification allows self-storage facilities to benefit from a shorter depreciation schedule. Instead of depreciating assets over the standard 39-year class life for commercial buildings, storage units can be depreciated over just seven years, resulting in significant tax savings.

    https://engineeredtaxservices.com/capitalize-on-tax-planning-opportunities-in-self-storage-industry/ 

    0 Cheers
    IRonMaN
    Level 15

    The storage units in my neck of the woods consist of buildings anchored to a concrete slab so they aren't very movable.


    Slava Ukraini!
    MGC94
    Level 7

    If the new units installed happen to be moveable (I will ask my client) what type of asset would it be on the asset entry worksheet for it to be 7 years? 

     

    7-year property—Because storage units are considered tangible personal property, they can often be classified as seven-year property.

     

    He rents the units out to people

    0 Cheers
    qbteachmt
    Level 15

    Moveable doesn't mean portable, like trailers. It means more like sheds on a slab, not solid walls with footings and foundations and crawl space mechanicals. Sometimes it's just framing and steel sheet siding, no insulation. It's important to understand the type of building. They range from concrete block multi-level buildings to steel shed-looking garage rows with rollup doors (for car or secure storage) and even just open bays (RV and boat storage) and parking areas behind a fence. For instance, a client had one entire side of their building encroached on by a BP fueling station, and lost their easement right on that side, so the doors were removed and steel siding closed off that side. Record and document storage rented to businesses will be climate controlled and even have fire suppression systems. There may be an on site manager residence, card controller gates for self-entry. That's why a segregation study would be useful in a large facility. A lot of the older places are just leftover machine sheds. The industry is lucrative because of these tax treatments.

    Your taxpayer's investment seems fairly low, so it's likely going to be some simple outbuilding shed type of structure.

    *******************************
    Don't yell at us; we're volunteers
    Terry53029
    Level 15
    Level 15

    My understanding of Tangible personal property contrasts from real property (or real estate), in the sense that real property is immovable and is permanently attached to a single location. Any storage buildings I have ever seen are not movable, and are attached to the land even the metal ones, and would not easily be moved. To me it would be a stretch to call a storage building Tangible personal property, but I suppose there are a few CPA's out there that would agree with @BobKamman