Note 10. Income Taxes

As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. However, certain of our consolidated subsidiaries are taxable REIT subsidiaries, which are subject to federal, state and foreign income taxes. We have filed an election to treat our primary TRS as a taxable REIT subsidiary effective January 1, 2014. In general, our TRS performs additional services for our customers and provides the advisory and property management services to the Managed REITs and otherwise generally engages in non-real estate related business. The TRS is subject to corporate U.S. federal and state income tax. Additionally, we own and operate a number of self storage properties located throughout Canada, the income of which is generally subject to income taxes under the laws of Canada.

The following table summarizes the domestic and international components of income (loss) before income taxes for the periods presented (in thousands):


	For the years ended December 31,
	2025			2024			2023
Domestic	$	697		$	(3,917	)	$	6,993
Foreign		(533	)		(486	)		2,058
Income (loss) before income taxes	$	164		$	(4,403	)	$	9,051

The following is a summary of our income tax expense (benefit) for the periods presented (in thousands):


	For the year ended December 31, 2025
	Federal			State			Canadian			Total
Current	$	-		$	76		$	779		$	855
Deferred		361			-			685			1,046
Total	$	361		$	76		$	1,464		$	1,901


	For the year ended December 31, 2024
	Federal			State			Canadian			Total
Current	$	18		$	41		$	580		$	639
Deferred		258			4			583			845
Total	$	276		$	45		$	1,163		$	1,484


	For the year ended December 31, 2023
	Federal			State			Canadian			Total
Current	$	191		$	33		$	480		$	704
Deferred		(10	)		(2	)		(3,288	)		(3,300	)
Total	$	181		$	31		$	(2,808	)	$	(2,596	)

The following is a summary of our income taxes paid by jurisdiction for the year ended December 31, 2025 (in thousands):


	Year Ended December 31, 2025
United States:
Federal tax payments	$	49
State and local		22
Canada:
Federal tax payments		226
Ontario provincial tax payments		173
Total taxes paid	$	470

Income tax expense (benefit) is reconciled to the hypothetical amounts computed at the U.S. federal statutory income tax rate for the periods presented below (dollars in thousands):


	Year Ended December 31, 2025			Rate
Expected tax at statutory rate	$	35			21.0	%
Non-taxable REIT loss		474			285.5	%
State and local income tax expense, net of federal benefit		60			36.1	%
Canadian tax effects:
Federal statutory tax rate difference		18			10.9	%
Ontario provincial income tax		13			7.8	%
Other Canadian provincial income tax		1			0.6	%
Change in valuation allowance:
Canadian federal		744			448.2	%
Ontario provincial		502			302.4	%
Other Canadian provincial		65			39.2	%
Other		(11	)		-6.6	%
Total income tax expense	$	1,901			1145.1	%

	Year Ended December 31, 2024			Rate
Expected benefit at statutory rate	$	(925	)		21.0	%
Non-taxable REIT loss		1,134			-25.7	%
State and local income tax expense, net of federal benefit		36			-0.8	%
Foreign income taxed at different rates		(12	)		0.3	%
Change in valuation allowance		1,223			-27.8	%
Other		28			-0.7	%
Total income tax expense	$	1,484			-33.7	%


	Year Ended December 31, 2023			Rate
Expected tax at statutory rate	$	1,901			21.0	%
Non-taxable REIT income		(1,243	)		-13.7	%
State and local income tax expense, net of federal benefit		25			0.3	%
Foreign income taxed at different rates		131			1.5	%
Change in valuation allowance		(3,410	)		-37.7	%
Total income tax benefit	$	(2,596	)		-28.7	%

The major sources of temporary differences that give rise to the deferred tax effects are shown below (in thousands):


	December 31, 2025			December 31, 2024
Deferred tax liabilities:
Intangible contract assets	$	(1,181	)	$	(6	)
Canadian real estate		(9,538	)		(9,163	)
Total deferred tax liability		(10,719	)		(9,169	)

Deferred tax assets:
Other		1,951			1,687
Canadian real estate and non-capital losses (1)		8,580			7,729
Total deferred tax assets		10,531			9,416

Valuation allowance		(3,189	)		(1,891	)

Net deferred tax liabilities	$	(3,377	)	$	(1,644	)

(1)

Such amount includes deferred tax assets from Canadian real estate basis differences, Canadian non-capital loss carryforwards, and Canadian non-deductible interest expense carry-forwards, which represented approximately $1.4 million, $5.2 million, and $2.0 million as of December 31, 2025, respectively, and approximately $1.1 million, $5.5 million, and $1.1 million as of December 31, 2024, respectively.

The Canadian non-capital losses expire between 2032 and 2045, and the non-deductible interest expense carry-forwards have no expiration. As of December 31, 2025 and December 31, 2024, we had Canadian non-capital loss carry forwards of approximately $19.7 million and $20.8 million, respectively. As of December 31, 2025 and 2024, we had a valuation allowance of approximately $3.2 million and $1.9 million, respectively, related to non-capital loss carry-forwards, non-deductible interest expense carry-forwards, and basis differences at certain of our Canadian properties.

As of December 31, 2025 and 2024, we had no interest or penalties related to uncertain tax positions. In the United States, the tax years 2021-2024 remain open to examination, and in Canada, the tax years 2021-2024 remain open to examination, with possible extensions under certain conditions that would allow the years 2018-2024 to be open to examination.

Historical Timeline

Fiscal Year	Filed
2025	Feb 27, 2026	Showing above
2024	Mar 12, 2025

2023	Mar 18, 2024

2022	Mar 3, 2023

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

SmartStop Self Storage REIT, Inc. Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures