KBKG's Approach to Residential Cost Segregation

Here at KBKG, we conduct in-depth cost segregation studies for a number of clients. Our studies can help you reduce your tax burden and save money. We realize that performing a residential cost segregation study can be intimidating, so we work closely with you every step of the way.

What Is Cost Segregation for Residential Real Estate?

When you purchase a residential property, you purchase both the building structure, components inside, and surrounding outside site improvements. Taxwise, these components depreciate much quicker than the building structure and can be written off using accelerated depreciation.

A cost segregation study on residential rental property examines a property’s purchase price or construction cost that would typically be depreciated over 27.5 years. The point of the study is to identify property components that can instead be depreciated over five or fifteen years. For example, a kitchen’s HVAC exhaust system or household appliances will depreciate over five years.

How Does KBKG Perform a Cost Segregation Study?

To perform a residential cost segregation study, KBKG will identify the separate building components, such as the flooring, roof, appliances, or electrical outlets, so should they be replaced, you can claim a loss deduction on the disposal.

When performing a cost segregation study, all available records and appraisal documents will be examined and evaluated from a clear, comprehensive format. KBKG will review all available cost details for the home, property blueprints, and physical inspection documents. Even if none of this information is readily available, KBKG may still be able to perform a study using engineering-based estimates.

Ideally, a cost segregation study can be performed at any time after a home’s purchase, construction, or remodeling. However, the best time to conduct a study is the year a property is purchased, constructed, or remodeled. If you are an investor considering a study, engaging during the remodel or construction planning phases is the best time to do so. KBKG can help you determine the right time to perform a study with a free preliminary analysis.

How Do You Use Our Residential Cost Segregator®?

To estimate how much you can save by performing a cost segregation analysis real estate study on your home, use our Residential Cost Segregator®. Our Residential Cost Segregator® software can calculate:

  • Tax deductions and additional cash flow each year
  • Estimated allocation to five, seven, and 15 years
  • Net present value in excess of 10 years and over the lifetime of the property

Our Residential Cost Segregator® software preliminary analysis is free to use to see if a cost segregation study is beneficial. Just enter basic information about your property and obtain the information mentioned above.

What Other Educational Resources Do We Have?

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KBKG offers a wealth of educational resources, including webinars dedicated to cost segregation study real estate. Our webinar course dives into the finer points of cost segregation and shows enrollees how to utilize new online software tools to generate reports for smaller properties (without the need to hire an engineer). It also discusses additional related tax planning strategies available.

Contact KBKG

If you are interested in having KBKG conduct a residential cost segregation real estate study on your residential rental home, we are here to assist. Our real estate cost segregation experts can help you increase cash flow, and our analysis of your property will stand up to an IRS review. Contact us today to learn more.