By Amy Campbell
You know what they say about death and taxes. With Tax Day approaching on April 15, self-storage operators are diligently working with their accountants to find savings wherever possible. It’s simple math—the more deductions you can take, the better position you’ll be in when it comes time to cash in or pay out. For small-business owners a decimal point one way or the other can make a huge difference. So how can you be sure you end up in the black rather than the red?
First, pay attention to your deductions. Are you sure you’re reporting everything you can accurately? I recently came across this article, which offers advice on the top tax deductions for small businesses. Note the information on business travel, entertaining (a special lunch for staff!), new equipment and charitable contributions. If your facility donated items to charity or hosted an event for one, include it.
Next, you should consider whether your self-storage business can take advantage of the new Final Tangible Property Regulations, which allows owners the ability to write off certain repairs, improvements and routine maintenance. Effective on Jan. 1, the regulations enables operators to deduct costs that meet certain criteria, protect against audit scrutiny and reduce capital gains taxes. Learn more in this ISS article.
Finally, consider challenging your facility’s property taxes. Like residential, commercial properties have taken a hit since 2008, with property values steadily dropping. While many markets are witnessing an upswing in property values, they’re likely no where near where they were pre-2008. So that fat tax bill from your city may not be totally in line with your property’s true value. Fortunately, there are ways to determine the fairness of the bill. This ISS article outlines the three things self-storage owners should evaluate to determine if they’re getting a fair shake.
While paying taxes will never be unavoidable, self-storage owners can take steps year round to lessen the pain. Keep accurate records, maintain your property and communicate regularly with your accountant to ensure you’re both up to date on tax regulations. You never know when your next great deduction will come along.
Have a tax tip or trick you’d like to share? Post a comment below or on this thread on Self-Storage Talk, the industry's largest online community.