Bonus Depreciation Benefits are Changing; What This Means & What To Do

Bonus Depreciation benefits are being reduced; What does this mean for self-storage owners and how can you take advantage before it's too late?

Temple, GA, August 12, 2022 - Janus International Group, Inc. (NYSE: JBI) ("Janus"), the leading global manufacturer and supplier of turn-key building solutions and new access control technologies for the self-storage and other commercial and industrial sectors, today announced that bonus depreciation benefits are being reduced, what that means for self-storage owners, and how they can take advantage of it before it's too late.

While to some in the self-storage industry, Cost Segregation studies may seem like a bourgeoning concept, the truth is, owners have been taking advantage of the significant tax benefits for over 20 years as a way to create quicker cash flow by accelerating the depreciation schedules as set forth by the IRS. While the traditional depreciation timelines have long-time held 39 years straight-line as term, bonus depreciation has allowed significant near-term cash flow in the form of a tax deferral for asset classes identified as 20 years and shorter. This benefit is changing at years end, and all property-related improvements will begin to feel the effects of a diminishing tax incentive. 

If you are not familiar with Cost Segregation and its impact on the bottom line of self-storage owners and operators, the team at CSSI (WD.CSSIStudy.com) has specialized for years in accelerating the depreciation schedules and thereby reducing the amount of taxes a self-storage owner may owe. When an owner purchases a building and/or operator replaces the roof, doors, lighting, pavement, and more, these become improvements that can be depreciated on an exponentially quicker tax schedule than what a traditional depreciation schedule may allow, thus resulting in significantly increased cash flow. Bonus allows taking the depreciation immediately. 

"I would have had to pay over $200,000 in federal taxes without a Cost Segregation Study on my facility. CSSI helped me identify what parts of my property qualified for Bonus Depreciation and I was able to directly benefit by reduced taxes." Dan Lusk, President - Arkansas Self Storage Association

Considering the recent changes that take effect after December 2022, in which the percentage of bonus depreciation drops 20% each year until 2027 (when the bonus depreciation benefit ceases entirely), this owner would have seen that return greatly impacted, to the point where he may have had to shell out hundreds of thousands of dollars to make site improvements only to have to wait over a decade to recoup costs. So, what does that mean for you?

Troy Bix, President of R3 division at Janus International, Inc (NYSE:JBI), "Every day, the R3 division of Janus International (Restore. Rebuild. Replace.) fields calls and meets with owners that look to make improvements to their facilities in the form of door replacements, hallway reskins, adding portables, and more. Some owners want to wait as long as they can to make these repairs and some simply cannot go any longer. By removing the bonus depreciation benefits, one can potentially lose the additional financial upside of making these capital improvements, i.e. losing out on a lot of capital deductions that could pay for the improvements."

Cost segregation studies are completed by experts in the Cost Segregation field in delivering engineering-based studies and the self-storage industry has benefited greatly. Instead of asking "what will these improvements truly cost me today?", perhaps it is to reframe the question as "what will it cost me in a year? Two Years? What tax benefits could I be missing out on today?". Contact your Janus R3 representative or CSSI teammate (WD.CSSIStudy.com) today.

ABOUT JANUS INTERNATIONAL:

MEDIA CONTACT:

Bethany Salmon

Marketing Contact Manager

Janus International

Marketing@JanusIntl.com