Are you in real estate? Do you have investments and cash tied up in real estate? If so, then you might need to consider working with a company to claim larger tax deductions on the property in the early days of your involvement through a strategy known as accelerated depreciation. But what you really need to do is align yourself with a cost segregation firm that is skilled in performing tax studies and understanding the best practices in their unique field to help you save money on your real estate investments.
Working with a cost segregation firm can help you inject life into your cash flow while maximizing cash savings. This is done through legal methods that allow them to reclassify property and specific building components into shorter depreciation schedules.
Since cost segregation is such a complex process, it is best left to the experts. However, you still need to find an expert. Luckily, you can use this short guide to help you find the right one for you.
1. R.E. Cost Seg – The Best Overall Cost Segregation Firm
R.E. Cost Seg is a cost segregation firm that focuses solely in this field. They provide services for real estate investors, financial advisors, and CPAs. Since they are a dedicated cost segregation company, they understand the nuances involved in the process and can provide an expert level of care and knowledge for their customers. They will also provide their customers with rewards and incentives for referring more customers. This method proves to be a win for their clients, who end up with extra cash in their pockets, the new referrals who receive a 10% discount for services, and for the company as well.
They offer a simple, yet comprehensive, four-step process that is designed to save their customers both time and money. Step one is as easy as requesting a free proposal. Step two involves confirming your property’s details. Step three consists of scheduling a virtual site visit. And step four involves an expert evaluation and the creation of a custom report to help save you money. In addition, this company offers a lifetime audit support service at no extra cost to its clients.
| Pros | Cons |
| Sole focus is on cost segregation | Upfront expenses may be more than customers expect, but are generally worth it |
| Fast turnaround within two to three weeks | Cost segregation is not ideal for all strategies |
| Lifetime audit support | |
| Receives consistently high reviews | |
| Works with a variety of industries beyond just real estate | |
| Transparent pricing plans |
2. KBKG – Good for Smaller Residential Properties
KBKG offers its clients a variety of services in the field of cost segregation, but they shine in their service to smaller residential property companies and the people who invest in them. They provide flexible software solutions, specifically their proprietary Residential Cost Segregator software. This software helps smaller entities to avoid the cost of hiring the full services of a cost segregation firm, but still reaps the benefits of their expertise via this software.
KBKG was established in the United States in 1999. They are independently owned and employ a range of tax experts, engineers, and attorneys. They have worked with a variety of well-known companies over their years in business.
| Pros | Cons |
| Positive client testimonials | Some customers have reported slow turnaround times |
| Provides high-quality engineered studies | Less customization options in lower cost service tiers |
| Offers an Advantage Audit Guarantee | |
| Diversified tax services available |
3. CSSI Services – Ideal for On-Site Physical Inspections
CSSI Services has more than 23 years of experience in the industry and over 50,000 studies completed. They understand the value of setting foot on your investment property for a true, eyes-on, physical inspection. Their studies are designed to ensure compliance with all 13 points of the IRS Audit Technique Guide.
Their on-site engineering methods give their clients peace of mind in the report’s results. CSSI’s strong engineering focus holds up well under IRS scrutiny.
| Pros | Cons |
| Offers a savings calculator on its website | Can be more expensive than their competitors |
| Provides specialized in-house expertise | Slower turnaround |
| Offers audit protection and compliance | |
| Offers a free feasibility analysis |
4. Cost Seg EZ – Best for Boutique Services
Cost Seg EZ offers its clients a high-touch experience through special attention to detail and in the care of its clients. They specialize in helping real estate investors throughout the United States. They offer three tiers of services to ensure their clients’ needs are met while giving them the opportunity to select the right package for their unique requirements.
This company deploys an engineering-based approach that is designed to look at properties from the bottom up. Their founder has over 15 years of experience in the industry and personally reviews every report to ensure the best practices are being followed and that their clients are receiving the maximum amount of benefits available.
| Pros | Cons |
| Very affordable | Potential for audit risks |
| Fast turnaround in service results | Not recommended for high-value properties |
| Small and agile team | |
| Utilizes an easy and intuitive program |
5. Cost Segregation Guys – Helpful Upfront Modeling
Cost Segregation Guys has a team of qualified experts that is made up of engineers and tax experts. They provide potential customers with upfront modeling scenarios and estimates so you have the information you need before you commit to the cost segregation process.
They have been in business for more than 20 years and seem to have the staying power to continue going. In addition, they offer easy-to-understand explainers on their website regarding what cost segregation is and how it can help.
| Pros | Cons |
| Offers remote or in-person services | The burden of proof falls to the property owner and may be an IRS audit risk more than with other companies |
| They make it easy to confirm property details | Some online reviewers have noted aggressive marketing tactics |
| Offers late customer service hours | |
| Positive customer service reviews |
Final Thoughts
Partnering with a cost segregation firm is a big step to take. However, it can prove fruitful in tax savings when you choose to work with the best company for your unique situation and needs. Investing is a nuanced experience. Let the experts help you make the most of your property investments and your money.