Welcome back to Exit & Equity, the email for serious self storage owners.

It's December 12, 2025. You have 19 days until the calendar flips to 2026.

Every day that passes is a day you can't get back for tax strategy, expense timing, or financial positioning. I know what you're thinking: "I'll deal with taxes in April when I file."

That is expensive thinking - Let’s get to it!

These aren't in priority order, they're all high-value. Read through the full list, then tackle the ones that apply to your situation. Even implementing 2-3 of these will materially improve your tax position and 2026 operations.

Earlier this year, we were operating under the assumption that bonus depreciation was phasing down to 40%. That is no longer true. The "One Big Beautiful Bill Act" (OBBBA), signed on July 4, 2025, retroactively restored 100% Bonus Depreciation for qualified assets placed in service after January 19, 2025.

What Qualifies:

The limit for Section 179 expensing has been raised to $2.5 million for 2025 giving you maximum flexibility.

The Math:
You need a new gate system and security upgrade = $60,000 total investment.

Real Example:
One operator I know needed $85K in security upgrades across three facilities. By accelerating the purchase from Q1 2026 to December 2025, they captured $29,750 in immediate tax savings. That's cash they can reinvest rather than loan to the IRS interest-free.

Warning: This only makes sense if you're profitable in 2025. If you're showing a loss, these deductions may go unused (though they can carry forward).

If you bought or built a storage facility in 2025, a cost segregation study is non-negotiable. It reclassifies ~20-30% of your building from 39-year depreciation to 5, 7, or 15-year depreciation schedules. Because the OBBBA restored 100% bonus depreciation, all that reclassified value is deductible immediately.

What Gets Reclassified:

Typical $3M facility purchase:

Real-World Timeline:

You can still benefit even if the study isn't complete by December 31st—getting the engagement letter signed demonstrates intent, and many firms can rush critical findings.

Action Items:

Catch-Up Opportunity: If you bought a facility in 2020-2024 and didn't do cost seg, you can still capture those benefits using a "look-back" cost seg study. You won't get 100% bonus on old purchases, but you'll still accelerate significant depreciation.

Warning: Cost seg creates large deductions now, smaller deductions later. Also consider depreciation recapture on sale if you don't hold long-term (10+ years ideal).

Cash-basis taxpayers (most small operators) can deduct expenses when paid, provided the benefit doesn't extend beyond 12 months. Pay January 2026 expenses in December 2025 = deduction this year.

What You Can Prepay:

What You CANNOT Prepay (IRS Rules):

The Math:
Prepay $15K in expenses (insurance + software + maintenance contracts):

Strategic Timing:
If you expect significantly higher income in 2026 (maybe you're selling a facility or have a big development stabilizing), prepaying 2025 expenses becomes even more valuable—you're taking deductions at a lower marginal rate.

Action Items:

A wave of properties hit the market for up to 40% less than recent values. AARE is buying these income-producing buildings at a discount for its new REIT, which plans to pay at least 90% of its income to investors. And you can be one of them.

Learn more about investing in AARE.

_{This is a paid advertisement for AARE Regulation CF offering. Please read the offering circular at https://invest.aare.com/}

Repairs are immediately deductible. Improvements must be capitalized and depreciated (though 100% bonus depreciation helps). The distinction matters for audit defense and future depreciation recapture when you sell.

IRS Definitions:

Repairs (Immediate Expense):

Improvements (Must Capitalize):

The Gray Area:
Some expenses can be argued either way. Work with your CPA to document WHY something is a repair (restore to previous condition) vs. improvement (made it better than before).

The Strategy:
If you're highly profitable in 2025, accelerate repairs into December for immediate deduction. If you expect higher income in 2026, you could defer discretionary repairs to January (though this is harder to control).

The Math:
$30K in needed repairs tackled in December vs. January:

Action Items:

Documentation Is Key:
Take photos showing you're restoring to previous condition, not improving beyond original state. This defends your expense classification if audited.

2025 saw aggressive price hikes in business software. QuickBooks Online Advanced now lists around $275/month, and subscription creep is real. December is the time to audit whether you're using what you're paying for and potentially prepay 2026 at a discount.

Common Software Cost Creep:

The Audit:

If you find software you ARE using, prepay 2026 now to:

Action Items:

The "Use It or Lose It" Mentality:
If you're paying for receipt capture software (Dext, Hubdoc), make 2026 the year you actually use it. Set up auto-forwarding from your email receipts, snap photos of paper receipts weekly. The software only has ROI if you use it.

Don't: Chase Solar Tax Credits (They're Mostly Gone)
Under the OBBBA, most commercial solar tax credits have been eliminated or severely restricted as of 2025. Don't sign a solar contract in December expecting the old 30% ITC credits—they likely don't exist for your deal anymore. If your solar sales rep says otherwise, verify independently with your CPA.

Don't: Rush a Bad Equipment Purchase
Buying something you don't need just to "save on taxes" is losing money. Spending $50K to save $17.5K in taxes means you're still out $32.5K. Only accelerate purchases you were already planning to make in Q1 2026. The tax tail shouldn't wag the business dog.

Don't: Panic-Buy Heavy Vehicles Without Research
While the Section 179 limit for heavy SUVs (>6,000 lbs) is $31,300 plus 100% bonus depreciation on the balance, you must have a legitimate business need and >50% business use. Buying a "company G-Wagon" that sits in your home driveway is a red flag for audits. The IRS knows this game.

Don't: Manufacture Fake Expenses
Accelerating legitimate expenses = smart. Creating bogus expenses or inflating invoices = fraud. The IRS has seen every trick. Don't risk an audit nightmare to save a few thousand in taxes.

Don't: Make Major Entity Changes Without Professional Help
Switching from LLC to S-corp, adding partners, restructuring ownership—these have complex tax implications. December 31st is not the time to DIY major entity changes. Discuss with your CPA in Q1 2026 for implementation later in the year with proper planning.

Don't: Ignore Your CPA Until December 28th
If you want to implement any of these strategies, call your CPA NOW. They're slammed in December and January with year-end planning and tax season prep. You need their input on what makes sense for YOUR specific situation. Don't be the client who calls on December 30th expecting miracles.

The Bottom Line:
Good tax strategy is intentional, not desperate. If a move doesn't pass the "would I do this even without the tax benefit?" test, skip it.

The reason December feels like a scramble is because you didn't track things systematically throughout 2025. Here's how to fix that for 2026 so next December is smooth instead of stressful.

Most operators lose $5K-$10K in deductions annually because they don't have systems to capture expenses in real-time. The solution isn't more discipline, it's better automation. Here's how to fix that:

1. Digitize Receipt Capture
Stop stuffing receipts in shoeboxes. Use Dext ($20-50/mo) or Xero mobile app. Snap photo → auto-extract data → sync to books. Takes 5 seconds per receipt vs 2 hours in December reconstructing.

2. Automate Mileage
Install MileIQ ($100/year) or Everlance ($60/year). Auto-tracks every drive. Swipe right (business) or left (personal) at trip end. Protects $5K+ annual deduction with zero effort.

3. Monthly Review Ritual (This is first on my list to implement in 2026)
Calendar: 5th of every month, 20-minute review.

4. Quarterly CPA Check-Ins
Don't wait until April. Schedule 15-minute calls in March, June, September, December to discuss estimated payments, big purchases, income projections.

The Tech Stack: <$200/month total

You could leave life right now. Let that determine what you do and say and think.

— Marcus Aurelius