Cost Segregation is a commonly used strategic tax planning tool that allows companies and individuals who have constructed, purchased, expanded or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.
When a property is purchased, not only does it include a building structure, but it also includes all of its interior and exterior components. On average, 20% to 40% of those components fall into tax categories that can be written off much quicker than the building structure. A Cost Segregation study dissects the construction cost or purchase price of the property that would otherwise be depreciated over 27 ½ or 39 years. The primary goal of a Cost Segregation study is to identify all property-related costs that can be depreciated over 5, 7 and 15 years. For example, certain electrical outlets that are dedicated to equipment such as appliances or computers should be depreciated over 5 years.
KBKG goes beyond a traditional Cost Segregation study and will also separate all of the different building structural components (such as the roof, windows or HVAC units) so when they are replaced, a loss deduction can be claimed on them. For leased property, we also separate tenant leasehold improvements.
Cost Segregation Benefits:
What is Involved in a Cost Segregation Study?
A quality Cost Segregation study evaluates all information, including available records, inspections and interviews, and presents the findings in a clear, well-documented format. Our process for conducting a detailed Cost Segregation includes: A review of any available cost detail for the property, a review of any available blue prints and a physical inspection of the property. If none of this information is available, a Cost Segregation study can still be performed by estimating component values on site.
When should a Cost Segregation study be conducted?
A Cost Segregation study can be completed any time after the purchase, remodel or construction of a property. However, the optimum time for a study for new owners is during the year a building is constructed, purchased or remodeled. For investors who are in the planning phases of construction or remodeling, the best time to consider a Cost Segregation study is before the infrastructure of the building is set. KBKG offers a free preliminary analysis that can help determine the right timing and strategy for any investor.
Cost Segregation Analysis
Please provide us with the following information, which will allow us to determine if your property will benefit from a Cost Segregation study!
Cost Segregation Savings Calculator (FREE)
The Cost Segregation Savings Calculator estimates your federal income tax savings and provides:
Cost Segregation Experts
Gian Pazzia, CCSP
CJ Aberin, CCSP
Malik Javed, CCSP
Eddie Price, CCSP
Lester Cook, CCSP, ASA
John Hanning, CCSP
Cost Segregation Webinars
Overview of Cost Segregation
Bonus Depreciation Update
Cost Segregation Resources
Cost Segregation Case Study
Cost Segregation FAQs
What should I consider when selecting a Cost Segregation provider?
Will the company be available if I get audited by the IRS?
Does the company have tax experts that can help if my CPA has questions?
How long will it take to complete the study?
How much will a Cost Segregation study cost?
The Internal Revenue Service (IRS) released a relatively substantial update to their Cost Segregation Audit Techniques Guide (ATG) in order to incorporate various tax and legal developments since it was first released.
Originally published in 2004, the Cost Segregation Audit …
It is not too late to accelerate cost segregation deductions on smaller residential properties using the Residential Cost Segregator®. The software was designed for tax preparers and …
KBKG’s complimentary online cost segregation tax savings calculator provides instant, estimated tax projections and is easy to use. Just enter the building details and instantly receive a summary detailing the additional depreciation deductions each year generated by a cost segregation study.