Residental Cost Segregation

Residential Cost Segregator®

Cost Segregation Software Designed for CPAs, Tax Preparers & Building Owners
Now available for rental homes, condos, townhomes & apartments

 
Detailed building component cost breakdown for retirement deductions and faster depreciation.

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Residential Properties

Available for Residential Rental Properties up to 6 units with a depreciable tax basis of $500,000 or less (purchase price less land).

Easy to Use

A report generally takes less than 15 minutes to complete without the need to hire a 3rd party Cost Segregation engineer. Designed for:
· CPAs
· Tax Preparers
· Building Owners

KBKG Audit Guarantee

We stand behind our reports. In the event of an IRS audit, KBKG will provide free audit support time at no additional charge for issues directly related to our report.

Backed by KBKG

A Cost Segregation report is only as good as the people standing behind its findings. KBKG employs one of the largest and most respected teams of Cost Segregation engineers in the US.
» Cost Segregation Management Team Bios

481(a) Adjustment

For properties acquired in prior years, optional 481(a) “missed deduction” calculation schedules are available for regular Federal and AMT.

$399 per Report

Discounts available for multiple properties.
» Discount Details       Get Started Today      

The cost of a report does not include your tax preparer’s fees to assist with information gathering, reviewing data, and implementation on your tax return. Please consult your tax advisor regarding additional fees.

What’s the difference between a formal Cost Segregation study performed by experienced engineers and a Residential Cost Segregator® report?

For most buildings, a Cost Segregation study requires the knowledge of a Certified Cost Segregation Professional (CCSP) with an engineering background. This is because of variations in construction from one building to another as well as varied tax law depending on building types. The engineer physically inspects the property and performs construction quantity takeoffs to account for each building component. Empirical cost data is then used to reconstruct the cost of the entire property. The result is a report with schedules showing values that can be substantiated by the data collected by the engineer.

The Residential Cost Segregator® utilizes many of the same concepts, calculations, and data. Instead of an engineer, the Residential Cost Segregator® relies on data provided by the building owner. So if the building owner indicates the property has carpeting in the bedrooms and was acquired with certain appliances, the software accounts for these items. The information provided is processed using KBKG’s proprietary algorithms and empirical data to generate a logical breakdown of costs for each major property component.

 

CASE STUDY

Property Details:
• 2 Story Residential Duplex.
• Depreciable basis = $300,000.
• Placed in Service two years ago.
• Building Area: 2,000 SF
• Lot Size: 4,000 SF

Immediate benefits from reclassification to shorter tax lives:
• Additional deductions of $21,000 in the first year.
• Additional deductions of $28,000 in the first 5 years.
• Net present value of $7,500*

*Using a tax rate of 40% and 8% ROI. Does not include benefits from future partial disposition of building components.

The Residential Cost Segregator® is designed specifically for properties too small to hire an experienced CCSP to analyze. Because every property is unique, it may not account for unusual items that exist and generally provides a more conservative allocation than may be available to the taxpayer. The Residential Cost Segregator® is not adequate for use to conduct a Cost Segregation study on larger, more complex properties.

What is Cost Segregation and why should I do it for my rental property?

Cost Segregation is a commonly used strategic tax planning tool that allows building owners who have constructed, purchased, expanded or remodeled real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

A Cost Segregation report for residential investment property dissects the purchase price of the property that would otherwise be depreciated over 27.5 years for income tax purposes.

  • Accelerate Depreciation Deductions: The primary goal of Cost Segregation is to identify all property-related costs that can be depreciated faster (typically over 5, 7 and 15 years).
  • Retirement and Partial Disposition deductions: The secondary goal of Cost Segregation is to establish the depreciable tax value for each major building component that is likely to be replaced in the future. Examples include roof, windows, doors, bathroom fixtures, HVAC, etc. When a component is replaced, taxpayers need this information to claim a “retirement loss” or “partial disposition” deduction for its remaining depreciation.

What is needed to perform a cost effective Cost Segregation Study?

General building information including, but not limited to the square footage, number of rooms, and location is needed as well as specific property features such as flooring, appliances, and parking spaces. If you don’t have all of the required information, our Residential Cost Segregator® allows you to save the information to be completed at a later time. Inputting the data and generating a complete report generally takes less than 15 minutes.

Why can’t my tax preparer do this for me without your software?

Most Cost Segregation studies are performed by experienced engineers who are familiar with building construction and extensive tax law related to depreciation and typically cost thousands of dollars. Tax preparers generally do not have the skill sets needed to conduct a study without the use of KBKG’s proprietary software. KBKG’s proprietary algorithms and empirical data combined with the experience of our in-house tax and engineering team ensure your report will maximize benefits and stand up to IRS audit scrutiny.

What do I receive from KBKG?

After inputting all of the required information into the application, users will receive the following:

  • Summary of tax benefits and additional deductions generated from Cost Segregation.
  • Detailed schedule of the building’s major costs organized by tax category (used to complete your tax return).
  • Excel export in depreciation schedule format.
  • Summary of all information input by the user.

For an additional fee – 481(a) adjustment calculation schedules (needed for properties acquired in prior tax years).

What if I get audited by the IRS?

A Cost Segregation report is only as good as the people standing behind its findings. KBKG employs one of the largest teams of Cost Segregation engineers in the US. We encourage you to carefully review our management team’s bios. As long as the information you input into our software is accurate and used for properties with a tax basis of less than $500,000, we are confident your audit will go smoothly. However, in the event of an IRS audit, KBKG will provide free audit support time at no additional charge for issues directly related to our report.

Residential Cost Segregator® FAQ

» Answers to your frequently asked questions