Essentially, a cost-segregation analysis allows an owner to depreciate certain types of building components and improvements over a shorter depreciation recovery period than the typical 39 years generally used for self-storage facilities. For instance, most site work (paving, curbing, fencing, lighting, retaining walls, storm drainage and other utilities) can now be depreciated over 15 years. Many systems, such as closed-circuit television, controlled access gates, computerized locking or alarm, can be depreciated over five to seven years.
You're probably wondering, "Why hasn't my accountant told me about this?" First, the concept of cost-segregation is a relatively new one. Second, it requires an engineering skill set and expertise most accounting firms don't have have in-house, such as being able to read construction drawings, and knowing construction systems, cost estimating and how various types of IRS asset classifications relate to existing construction and use. A cost-segregation study does not replace the accountant's role in determining taxes or preparing tax documents and forms. It provides information to the accountant so the proper IRS forms may be prepared and the correct, allowable depreciation calculated.
The following chart is courtesy of my friends at Monterymotorsportpark.com It demonstrates an example of the 1st year deduction.