May 3, 2016

Automated Parking and the Benefit of Accelerated Tax Depreciation

Of the many benefits Automated Parking Systems (APS) offer, tax depreciation, particularly in comparison to standard car parks and garages, is one of the most attractive economic values. Developers could benefit from accelerated tax depreciation in as little as approximately seven years.

With APS, property owners and developers are eligible for tax depreciation—a tax deduction that permits a recovery of costs during the years in which the equipment should still be useful—but at an accelerated rate. This is a substantial advantage over ordinary parking buildings that depreciate over longer periods. APS parking structures depreciate faster primarily because they are made of mechanics, and thus considered equipment rather than a building.

Parking lots and structures are considered buildings and land improvements, sometimes funded by taxpayers. Land is not considered depreciable by the IRS, and buildings depreciate at a much slower rate than a piece of personal property, such as the mechanical equipment required for APS. The value of this equipment generally declines in less than a decade, in fact.


This swifter depreciation of equipment means not only a tax advantage, but regular maintenance for more constant, smooth running. As the parts depreciate, they are maintained and replaced more frequently to keep the equipment functioning at its best. Therefore, in addition to the tax advantage of accelerated depreciation, the automated mechanics of the parking garage function better, and more consistently.

Parking lots on the surface constructed of concrete, asphalt, curbs, perimeters, and other related materials do not have a lifespan as long as standard, multi-level parking structures; the latter are expected to last anytime from 25 to 50 years. Even so, APS assemblies still have a shorter lifespan than both types because their mechanisms are not expected to be useful as long as the materials that are in common parking buildings, and they are considered pieces of personal property by the IRS. Therefore, compared to the decades it takes buildings to depreciate (and thus materials to be upgraded or replaced), the tax-related (and maintenance-related) profitability in owning APS is much higher than typical parking areas and structures.

APS is impressive technology that benefits patrons, business owners, the environment, and more in several ways. Accelerated tax depreciation may seem to be a minor advantage in comparison to others, but with the advice of a tax consultant as a guide, an owner or developer may find it is yet another good reason to invest in the latest of parking technology.

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