The IOS Tax Story Nobody Talks About
We will write off $4.7M of a $5.985M purchase in year one on our latest IOS acquisition in Laredo, Texas.
That is 78.2% of the purchase price and $1.60 of bonus depreciation for every dollar of equity our investors put in. In a single tax year.
This is the IOS tax story that does not get enough attention.
Most commercial real estate depreciates over 39 years. The same $4.7M in depreciable improvements recovered straight-line over 39 years generates roughly $145,000 annually. Slow, predictable, and at a fraction of what IOS delivers.
IOS is physically different. The value is in land improvements: concrete paving, fencing, canopy structures, service bays, lighting. Under MACRS, these fall into 5, 7, and 15-year asset classes — not 39. Combined with bonus depreciation, they can be written off immediately.
At our Laredo acquisition, 539 El Pico Road, here is how the purchase price breaks down:
- 5-year property (equipment, fixtures): $480,000
- 7-year property (office furniture, lighting): $41,000
- 15-year property (paving, fencing, canopy): $4,161,000
- 39-year property (actual building): $1,003,000
- Non-depreciable land: $300,000
Everything except the building and land qualified for accelerated depreciation.
That is more than 30 times the year-one depreciation you would capture from the same depreciable basis spread over 39 years.
Once we lease the property out, we’ll be clipping strong cash flow yield for our investors on top of this.
If investing in IOS is of interest, please feel free to reach out directly. Would love to talk to you about bonus depreciation and all the other reasons my family is excited to invest in industrial outdoor storage.
