designed to address residential rental property with a maximum of
$600,000 in depreciable basis.
DIY Cost Segregation Software for Smaller Residential Properties
The Residential Cost Segregator® is an online software program that allows CPA’s to generate custom reports in just minutes,
providing tax benefits to clients without hiring a specialist. The software is available for residential rental properties up to
6 units with a depreciable tax basis of $600,000 or less (purchase price less land).
Preview Your Tax Savings with KBKG's Residential Cost Segregator® Calculator
Try before you buy. Use our free preview calculator below to instantly estimate the benefits of the Residential Cost Segregator®.
*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.
Frequently Asked Questions
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 carpet 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.
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.
• 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 a future partial disposition of building components.
Free Webinar for CPAs
Cost Segregation Software Tools & Tax Strategies
Participate in a live demo for cost segregation software tools including the Residential Cost Segregator™ and the KBKG Partial Disposition Calculator.
Learn how to generate cost segregation reports in 3 easy steps for residential rental properties with a purchase price of $600k or less (excluding land).
Cost Segregation Tax Insights
PASADENA, Calif. – KBKG, a tax credits and incentives consulting firm, has announced the promotion of Amar Patel to Principal of Cost Segregation. Patel is based out of the firm’s Southeast office and most recently spent the past two years as the Director of Cost Segregation. “Amar and I have known each other our entire … Read More
Looking for CPE credit? We have several sessions available this month. Click the links below to register. If you have questions or need help registering, please email [email protected] Research & Development Tax Credits 11/1/2022 | 12:00 PM PT | 1 hour | 1 CPE credit This webinar will cover the fundamentals of the Research and … Read More
Attending the AFWA Women Who Count Conference is Principal, Lester Cook, Manager, Sasha Brenecki, and Regional Director Todd French who will represent KBKG at the event, which takes place October 25th-28th in Chicago, Illinois at The Drake. About the Event This is the first time in two years that the AFWA will host its annual … Read More
Attending the 2022 Tal Glenn Memorial Golf Tournament is our Principal, Eddie Price, and our Regional Director, Matthew Geltz, who will represent KBKG at the event, which takes place on October 24th in Tyler, Texas at The Cascades Golf & Country Club. About the Event The Tal Glenn Memorial Golf Tournament is an annual golf … Read More
IRS Updates Audit Technique Guide for Cost Segregation On June 1st of 2022, the IRS published the latest edition of the Cost Segregation Audit Technique Guide (ATG). The Cost Segregation ATG assists IRS examiners during audits by providing an understanding of technical information, examination techniques, and what to look for when reviewing cost segregation reports. … Read More
Research & Development Tax Credit Principal, Jonathan Tucker and Director, Ian Williams will be speaking on Research and Development Tax Credits Overview and Recent Updates. Their presentation is taking place on Thursday, June 9th from 10:30 AM – 11:20 AM. Regional Director, Chad Niehaus is speaking in a 25-minute Ted-Talk, a new way of presenting … Read More
This year, Sumit Sharma, Paul McVoy, Alexis McClellan, and Justin Brumfield will be representing KBKG at the NJCPA Convention & Expo. This conference takes place from June 14th to June 17th at NJCPA Convention & Expo in Atlantic City. About the NJCPA Convention & Expo The NJCPA Convention & Expo knows that there are mega-changes … Read More
The IRS and Treasury released Rev. Proc. 2022-14 earlier this year, updating and superseding the current list of automatic method changes. Background Taxpayers generally cannot change from an established accounting method to a different method unless they first obtain IRS consent to change from the established accounting method. Taxpayers must obtain IRS consent to change … Read More
As featured in Accounting Today Real estate owners have limited options to pull cash out of a 1031 exchange without having to pay income tax. With proper tax planning, this problem can be solved with a cost segregation study. The application of cost segregation for this purpose may vary depending on the tax rules in … Read More
Alex Martin, Transfer Pricing Principal, will be speaking at TXCPA Dallas Convergence on Monday, May 16th. He’ll be joined by Bill Taylor, William Long, Matthew Geltz, Mike Cornell, and Emily Kennedy from our Dallas Fort-Worth office. This event is taking place at the Omni Frisco Hotel in Frisco, Texas. About the TXCPA Dallas Convergence TXCPA … Read More
Our Research and Development Tax Credit Director, Ian Williams, is speaking while Principal, Jonathan Tucker, and Regional Director Chad Niehaus are representing KBKG at the SCACPA Spring Splash Conference 2022. This event takes place from May 12th and May 13th in Spartanburg, SC. Our Southeast team specializes in Cost Segregation, Green Building Tax Incentives (45L … Read More
>Our Cost Segregation & Fixed Assets Principal, Sumit Sharma, will be speaking at NYMS this year during the Value Add panel discussion. Along with him, Alexis McClellan and Justin Brumfield will represent KBKG. The New York Multifamily Summit will take place on Thursday, May 12th in New York, New York. This event is New York’s … Read More
“I used the Residential Cost Segregator® software right after it came out in September of 2016 for a client that had multiple single family rental properties. The cost seg report savings on the properties were tremendous. The client was very happy and I was able to charge a lot more for the tax return.”
-- Jeff Robertson CPA, Klein, Bogakos and Robertson, CPAs Inc