What is a Cost Segregation Study & How Does it Work?

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.

Case Studies by Building Type

Estimate Your Cost Segregation Savings Instantly

The Cost Segregation Savings Calculator estimates your federal income tax savings and provides:

• Estimated allocation to 5, 7, 15, and real property
• Tax deductions and additional cash flow by year
• Net present value over 10 years and over the life of the property

Try it for free. Enter basic building info and instantly receive the estimated tax savings.