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 Results
10 year sampling study with 125 locations
Results: Millions of accelerated deductions
“Since our initial engagement with KBKG was a success, we now engage them to review our fixed asset reporting annually”
Big 5 Corporation
Cost Segregation Experts
Gian Pazzia, CCSP
Principal » Biography
Eddie Price, CCSP
Director » Biography
Malik Javed, CCSP
Manager » Biography
Cost Segregation Webinars
Overview of Cost Segregation
This course will provide an in-depth background of the most current information, including recent developments, how to measure potential savings and identify clients who qualify, how a study is performed, depreciation rules, the correct deliverable format, and more. » Details
Bonus Depreciation Update
This class will give you updates on bonus depreciation and cost segregation over the last 2 years. It will clarify many confusing areas of bonus depreciation and discuss how it interacts with cost segregation. Finally, we will discuss any current case law or legal developments in the area of Cost Segregation. » Details
About Cost Segregation
Cost Segregation is a strategic tax savings 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.
In general, it is easy to identify furniture, fixtures, and equipment (FF&E) that are depreciated over 5 or 7 years for tax purposes. However, a Cost Segregation Study goes far beyond that by dissecting construction costs that are usually depreciated over 27 ½ or 39 years. The primary goal of a Cost Segregation Study is to identify all construction-related costs that can be depreciated over 5, 7 and 15 years.
For example, 20% to 50% of the total electrical costs in most buildings can qualify as personal property (depreciated over 5 or 7 years). Reducing tax lives results in accelerated depreciation deductions, a reduced tax liability, and increased cash flow.
Walker Properties constructed a brand new office building in 2012.
The new building has 60,000 square feet and a lot size of 220,000 square feet.
Results: Year one deductions of over $400,000.
Year one increased cash flow of $170,000.
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 all cost detail for the property including but not limited to: the general contractor’s application for payment, construction invoices, change orders, depreciation schedules, and appraisals.
When should a Cost Segregation Study be conducted?
The ideal time for a Cost Segregation Study can vary depending on a client’s tax situation.
At KBKG, our team of engineers and tax experts work together with clients and their accountants to recommend the best tax planning solution to fit their needs. A free preliminary analysis can help determine the right timing and strategy for any investor.
- Post-purchase, Remodel, or Construction: "Look-back" Cost Segregation Study: A Cost Segregation Study can be completed anytime after the purchase, remodel, or construction of a property.
- Year Placed in Service: The optimum time for a Cost Segregation Study for new owners, is during the year a building is constructed, purchased, or remodeled.
- Pre-construction: 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.
Cost Segregation FAQs
What should I consider when selecting a cost segregation provider?
You should always read the bio and resume of the persons signing your cost segregation study. Make sure they are certified with the American Society of Cost Segregation Professionals (ASCSP). The designation for certified cost segregation professional is CCSP and comes after the engineer’s name. Any designation less than that is substandard. Just like you would only use a CPA to file your tax return, you should only use a CCSP to conduct your cost segregation study.
Will the company be available if I get audited by the IRS?
Any company can give you a cost segregation report with results that saves you a lot of money; the real question is whether it will stand up to IRS scrutiny. The true value of the fee you pay is how easy (or painful) the audit process goes. Every cost segregation company will say they stand behind their work, but how can you really know what will happen when the IRS audits the report? Using a larger company that has been in business many years should give you comfort that they can successfully defend their work against an IRS audit. Look at their client profile, bigger well known clients have a higher probability of being audited by the IRS. A company without high profile clients probably doesn’t have a great deal of experience dealing with the IRS.
Does the company have tax experts that can help if my CPA has questions?
There are so many unique fact patterns and situations that can have a tax impact on how the cost segregation deductions will flow through on your tax return. A cost segregation engineer does not know enough about tax to truly understand how the cost segregation deductions will specifically impact you. Using a firm with tax experts on staff will save you money if your CPA has any questions regarding your specific situation. Using a cost segregation firm without tax experts means your CPA may have to spend several hours researching the answer and then charge you for that. KBKG has a staff of more than 10 tax experts with over 100 combined years of experience filing tax returns and won’t charge you extra to provide answers we have already researched.
How long will it take to complete the study?
A cost segregation study will typically take 30-60 days to complete depending on how quickly we receive the information we need.
How much will a cost segregation study cost?
The fee for a cost segregation study will range depending on the building size, building type, number of tenants, and other physical characteristics. Typically fees can range from $5,000 to $15,000.
Call today for a consultation 877.525.4462