$559K Reclassified on a Mixed-Use Apartment and Self Storage Property in Ohio
A returning USTAGI client bought this mixed-use property in Ohio, with apartments and self storage on one site, and placed it in service in March 2025. It has two buildings with central HVAC on a site of about 1.3 acres. The $2.8M price included $694K of land, leaving a depreciable basis of $2.11M.
- Purchase price
- $2.8M
- Depreciable basis
- $2.11M
- Reclassified
- $559K
- Share of basis
- 27%
The property and the result
Because the property mixes residential and commercial uses, it was depreciated as nonresidential property over 39 years. After an on-site inspection by USTAGI in May 2025, the study moved $477K into 5-year property and $82K into 15-year property, a total of $559K or 27% of the basis.
The result sits right at the 27.7% median across USTAGI's commercial studies. The study was delivered in June 2025, in time for the owner's 2025 planning.
How the purchase price was allocated
| Category | Amount | Share of price |
|---|---|---|
| Land (not depreciable) | $694K | 25% |
| 5-year property | $477K | 17% |
| 15-year property | $82K | 3% |
| Remaining 39-year building basis | $1.55M | 55% |
How it compares: this study reclassified 27% of the depreciable basis. Across 170 commercial studies USTAGI has completed, the median is 27.7%.
How the study was done
- Study type
- Detailed engineering study
- Inspection
- USTAGI on-site inspection
- Cost data
- RSMeans construction cost data
- Timing
- Same-year study for the 2025 tax year
- Placed in service
- March 2025
- Depreciation before the study
- 39-year nonresidential
- Buildings
- 2
- Client
- Returning USTAGI client
What typically qualifies on a property like this
The study assigns each component of the building and site to its IRS recovery period. On a mixed-use apartment and self storage property, these are the kinds of items that usually move off the 39-year schedule.
5-year property
- Apartment flooring, cabinets and appliances
- Decorative lighting and millwork
- Security, access control and camera systems
- Dedicated electrical for equipment
15-year property
- Paving and drive aisles between storage buildings
- Perimeter fencing and gates
- Site lighting and signage
- Landscaping and drainage
What this means at tax time
Property placed in service in 2025 may qualify for 100% bonus depreciation if it was acquired after January 19, 2025, subject to applicable requirements. Where it applies, the $559K of reclassified property can be deducted in the first year instead of over 5 and 15 years.
Even without bonus depreciation, 5- and 15-year property is depreciated far faster than the 39-year building schedule, so more of the deduction lands in the early years of ownership. The remaining $1.55M of basis stays on the 39-year schedule.
Studying the property in the year it is placed in service means the faster schedules start on the first return, with no catch-up filing needed.
Questions about this case study
A building counts as residential rental property only if at least 80% of its gross rental income comes from dwelling units. Below that, it is nonresidential and depreciated over 39 years. This property was depreciated as nonresidential.
No. One study covers every building on the property and assigns each component to its recovery period.
Paving and drive aisles, perimeter fencing and gates, site lighting, signage and drainage are 15-year land improvements. Security and access control systems are usually 5-year property.
Yes. This property was placed in service in March and inspected in May. Any time before the return is filed works for a same-year study, and a look-back study works after that.
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Results shown are from a completed USTAGI cost segregation study and are not a guarantee of future results. The client is not named, the location is shown by state and amounts are rounded. “Reclassified” is the depreciable basis the study moved into 5, 7 and 15-year property; it is not a tax-savings figure. Outcomes depend on each property and each owner’s tax situation. Consult your tax advisor about your situation.