Tax Incentives For Self-Storage Operators
Self-storage operators are subject to all the ADA building access regulations applicable to structures. In 2010, the standards were revised to include space accessibility that applied specifically to unit doors in self-storage buildings. The storage space regulations for accessibility relating to unit doors were defined into “scoping” regulations (as to how many doors per facility were affected). Those regulations determined that unit doors in a self-service storage facility must be accessible as follows: five percent if less than 200 units, 10 units plus two percent if more than 200. The unit doors must also be “dispersed” among the “classes” of spaces provided. Since the term “classes” is undefined, it could mean either the size of a unit or the type of unit (i.e., climate controlled). If there are more classes than the number of accessible units that are required, operators do not need to have additional accessible units just to have one in each class. There also appears to be no need to disperse the accessible units among buildings in a multi-building facility. Further, as with hotels, there is no requirement to hold the unit back from rental solely for a disabled customer if other spaces are otherwise rented and the space is needed.
One aspect of the unit doors applies to the handles that are used to open and close the roll-up doors. The regulations require: “Handles, pulls, latches, locks, and other operating devices on accessible doors shall have a shape that is easy to grasp with one hand and does not require tight grasping, tight pinching, or twisting of the wrist to operate. Lever operated mechanisms, push type mechanisms, and U-shaped handles are acceptable designs.” (See ADAAG 4.13.9).
The ADA requires that small businesses remove architectural barriers in existing facilities when it is “readily achievable” to do so. Readily achievable means “easily accomplishable without much difficulty or expense.” This requirement is based on the size and resources of a business. So, businesses with more resources are expected to remove more barriers than businesses with fewer resources. Part of the consideration for the readily achievable standard is the tax benefit that a facility could see by performing these renovations to meet ADA compliance. Two tax incentives are available for businesses to help cover the costs of these renovations or improvements to access. The first is a tax credit and the second is a tax deduction. A tax credit is subtracted from the tax liability after a business calculates its taxes. A tax deduction is subtracted from the business’ income to then establish the taxable income. The tax credit for ADA repairs is available for small businesses with previous tax year revenue under $1 million or less than 30 full-time employees. The credit can be used to cover expenditures for the removal of any architectural barriers. The amount of the tax credit is equal to 50 percent of the maximum expenditure for the repairs, up to $10,250.00. There is no credit for the first $250.00, therefore the maximum credit is $5,000.00. The tax deduction is up to a maximum of $15,000.00 per year, for any size company. Therefore, a company that qualifies for the credit can also qualify for the deduction. If a small business’ expenses exceed $10,250.00 (for the maximum $5,000.00 tax credit), then the deduction equals the difference between the total spent and the amount of the credit claimed by the business. There are certain states where operators can find additional state tax incentives for expenses arising from ADA barrier removal. The tax credits and deductions can be used annually and any unused tax credit may be carried over to the following year.
Scott Zucker is a partner in the law firm of Weissmann Zucker Euster Morochnik & Garber, P.C. in Atlanta, Georgia.