Oil Change Buildings have special status in the IRS tax code – kind of like C-stores but not completely. Often times these entire buildings are classified as 15 year class life as long as they meet the IRS guidelines on 50% of their revenue coming from oil (check with your own tax advisor on this). We do study a lot of these because many operators don’t get 50% of their revenue from sales of oil.

This building was placed into service in 2024 when bonus depreciation was 60%. The owner’s CPA was on the ball and had us run some numbers to see if it might make sense to do a cost segregation study on the building to see what we might squeeze out especially with the 5 year class life property. If the 5 year class life property comes in anything north of 5%, it will be a win for the owner as they will be able to take the balance of the depreciation not taken as bonus over the next 4 years. So in 2025, 2026, 2027 and 2028, they will get an increased depreciation deduction above what they would have gotten had they not done the study and just taken 60% bonus depreciation.

No doubt there have been many of these oil service buildings that have gone into service at some point in 2024…many of them could also be taking advantage of these smart tax strategy but most won’t. Either they won’t be aware of it or their CPA won’t be. It’s nice to see CPAs who are paying attention to these details.

Brands that we often see as oil change or oil service buildings include: Jiffy Lube, Take 5, Valvoline and Strickland Brothers.

John Murphy CSSI