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Are you thinking about cost segregation for your commercial or investment real estate? The top cost segregation firms can maximize your tax benefits while ensuring compliance with IRS regulations.
In this article, I’ve put together a list of six outstanding cost segregation companies known for their reliability and efficiency. They can significantly assist you in optimizing your tax savings. Let’s dive in.
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6 Best Cost Segregation Companies
- Omega Accounting Solutions – Best Cost Segregation Company Overall
- KBKG – Best for Additional Tax Credits & Incentives
- Engineered Tax Services – Best for Large Businesses & Properties
- CSSI – Best for Small Businesses & Properties
- Duffy+Duffy – Best for LEED-Certified Projects
- Madisons SPECS – Best for Remote Cost Segregation Studies
With 15 years of experience in tax-related services, Omega Accounting Solutions offers a comprehensive range of services aimed at maximizing your tax benefits. They specialize in cost segregation, Employee Retention Credits (ERC), and more, providing free consultations and a secure, straightforward process for claiming deductions and credits.
Omega stands out for offering additional business and financial services beyond typical cost segregation companies offer, earning high praise in numerous client reviews.
Services Provided by Omega Accounting Solutions:
Cost Segregation: Get started with a free initial consultation, followed by a detailed property analysis conducted by an expert familiar with all relevant tax and building regulations at both federal and state levels.
- Employee Retention Credits (ERC) and ERC Loans
- Research & Development (R&D) Tax Credits
- High Road Cannabis Tax Credits (HRCTC)
- Accounting & Bookkeeping Services
- Financial & Business Services
- Offers a free initial consultation
- Renowned for excellent customer support
- Provides a broad array of additional tax and business services
- Maintains an excellent public reputation
- Lacks transparent fee structures
- Does not provide a knowledge base or help center
Omega Accounting Solutions Features
- Expert cost segregation: Work with specialists who have backgrounds in tax and engineering, ensuring you maximize benefits while adhering to IRS guidelines.
- Free feasibility analysis: Determine your eligibility for cost segregation without any upfront cost.
- Additional tax credits & incentives: Benefit from additional services such as R&D credits, ERC, and other tax incentives.
- Additional business services: From fractional CFO services to bookkeeping and business intelligence reporting, Omega provides all-encompassing solutions for your business needs.
- Excellent support: Omega’s commitment to customer service is evident in its numerous five-star reviews, highlighting its responsiveness, expertise, and efficient processes.
KBKG earns its place on this list with an impressive array of resources. Offering free tax calculators, tax software, a wide range of tax credit services, and extensive industry experience, KBKG stands out as a top choice for cost segregation services. The company is also renowned for its exceptional customer support.
KBKG has garnered a notable number of online reviews, which is uncommon for cost segregation companies. These reviews are predominantly positive, with clients commending the team for their professionalism, responsiveness, and the efficient and thorough completion of cost segregation studies.
KBKG provides cost segregation services to property owners and businesses across various industries. In addition to these services, KBKG offers:
- Employee Retention Credits (ERC)
- Research & Development (R&D) Tax Credits
- Fixed Asset Reviews
- Green Building Tax Incentives
- Interest Charge Domestic International Sales Corporation (IC-DISC)
- Offers a free feasibility analysis
- Known for excellent customer service
- Provides tax benefit calculators
- Lacks transparent fee structure
- Doesn’t offer live chat support
KBKG Features
Here’s why KBKG is highly recommended among the best cost segregation companies:
- Free feasibility analysis: Determine your eligibility for cost segregation without any initial cost.
- Free cost segregation calculator: A standout tool that provides a two-page report on your property after inputting specific details, showcasing one of the most innovative and useful features in the market.
- Free tax calculators: Beyond the cost segregation calculator, KBKG also offers calculators for ERC and R&D, including an R&D payroll tax calculator.
- Tax software: KBKG provides three paid software solutions tailored for cost segregation, R&D tax credits, and 481(a) adjustments, enhancing the accuracy and efficiency of financial processes.
- Educational Resources: KBKG is committed to helping both taxpayers and professionals stay updated with tax insights, articles, and webinars that offer Continuing Professional Education (CPE) credits.
Like Omega Accounting Services, Engineered Tax Services (ETS) offers a robust suite of specialty tax services including cost segregation, ERC, and R&D claims. ETS employs an engineering-based approach to cost segregation studies and boasts a notable track record of collaborating with major corporations like Hilton, Marriott, and Toyota.
Given its extensive experience in the specialty tax arena, coupled with a multitude of positive customer reviews, businesses of any size, particularly large enterprises or investors handling multiple properties, can confidently engage ETS for cost segregation and tax credit services.
ETS conducts cost segregation studies across various industries and for properties of all sizes. The company features numerous case studies, including several that involve multi-million dollar properties nationwide.
Additional Services Offered by ETS:
- Employee Retention Credits (ERC)
- Research & Development Tax Credits
- Work Opportunity Tax Credits (WOTC)
- Wireless Infrastructure Technology (WIT)
- Energy Tax Credits & Deductions
- Grant Services
- Other Business Tax Credits & Deductions
- Free feasibility analysis
- A broad range of additional tax services available
- Fees are not transparent
- Some complaints regarding customer service
Engineered Tax Services Features
Engineered Tax Services distinguishes itself with several features that make it a top choice for cost segregation and tax credits:
- Free feasibility analysis: Determine your eligibility for cost segregation with a free, no-obligation analysis.
- Free analysis for additional tax credits: As an ETS client, assess your qualification for ERC, WIT, R&D, and other tax credits and incentives at no additional cost.
- Educational resources: ETS offers an extensive collection of resources designed to educate business owners and investors. These include case studies, podcasts, webinars, eBooks, and more, providing valuable knowledge and insights.
- Excellent customer support: Engineered Tax Services is highly praised in numerous reviews for its knowledgeable and responsive representatives, as well as for providing detailed and accurate cost segregation reports.
While CSSI may not offer a wide array of tax services, it specializes exclusively in cost segregation and has successfully completed over 45,000 cost segregation studies to date.
The company offers a free initial property analysis to help clients understand potential tax benefits and provides a quote for its competitively priced services. CSSI is equipped to manage large-scale cost segregation studies but typically works with commercial properties valued between $200,000 and $1.5 billion.
CSSI’s singular focus sets it apart from other companies that offer a broader range of tax services, positioning it as a specialist in cost segregation studies.
- Free initial consultation
- Strong commitment to compliance
- Extensive experience with over 45,000 cost segregation studies completed
- Lacks additional tax services or educational resources
- Pricing isn’t transparent
- Limited options for customer support
CSSI Features
CSSI might not have the extensive features of some competitors, but it boasts a solid reputation for its engineering-based approach to cost segregation studies. Key features include:
- Free feasibility analysis: Determine your eligibility for cost segregation with a complimentary, no-obligation feasibility analysis.
- Compliance focused: CSSI emphasizes compliance, ensuring each cost segregation study meets all 13 points outlined in the tax code.
- Cost segregation resources: Although limited, CSSI provides CPE presentations, articles, and case studies on cost segregation to educate its clients.
Since 2002, Duffy+Duffy has been an established firm exclusively conducting cost segregation studies, focusing its expertise without the distraction of other tax services. The company is noted for its work with LEED-certified properties, aiding owners of sustainable businesses in reducing their tax liabilities while accurately accounting for depreciable costs.
This level of specialized experience in cost segregation is uncommon, which is why Duffy+Duffy stands out on this list. The company is dedicated to cost segregation studies and does not delve into other tax services.
- Offers a free initial analysis
- Features a referral program
- Boasts an experienced team that conducts studies based on case law and IRS guidelines
- Doesn’t provide additional tax services
- Pricing details are not transparent
- Limited availability of client reviews
Duffy+Duffy Features
While Duffy+Duffy keeps its offerings straightforward in terms of cost segregation, there are several compelling reasons why the company has maintained its industry presence for decades:
- Free feasibility analysis: Prospective clients can receive a no-cost estimate of potential tax benefits along with a fee quote for conducting the study.
- LEED-certified projects: Duffy+Duffy has significant experience in handling cost segregation studies for properties with Leadership in Energy and Environmental Design (LEED) certification.
- Referral program: Duffy+Duffy encourages connections through a referral partnership program, offering benefits for both referrer and referee.
Madison SPECS provides a unique offering with its Smart Tour, where an on-site employee collaborates with a Madison SPECS expert to conduct a remote cost segregation study using video and digital technology.
This innovative approach is non-intrusive, accelerates the process, and creates a video record for IRS verification. Since its inception, Madison SPECS has assisted clients in reducing their tax liabilities by over $3 billion and specializes in cost segregation for various investment and commercial properties.
- Offers a free feasibility analysis
- Innovative Smart Tour cost segregation kit
- Employs a combined approach of tax expertise and engineering principles
- Does not provide services beyond cost segregation
- Pricing details are not transparent
- Limited availability of client reviews
Madison SPECS Features
Here are some key features that highlight why Madison SPECS might be the right choice for your cost segregation needs:
- Free Initial Analysis: Madison SPECS offers a complimentary analysis to assess your eligibility for cost segregation benefits.
- Smart Tour: This unique kit enables remote cost segregation studies, ensuring faster completion and additional advantages such as a video trail for IRS documentation.
- In-House Experts: The company employs over 60 in-house professionals, including engineers, who specialize in both the technical and regulatory aspects of cost segregation.
Methodology for Choosing The Best Cost Segregation Companies
We evaluated more than a dozen firms specializing in cost segregation, encompassing both dedicated cost segregation service providers and specialty tax firms that offer a range of tax credits and incentives for businesses.
To determine the best and most reputable options for our list, we took into account several factors, including customer feedback, the range of services provided, the availability of a free consultation, the quality of customer support, and the overall reputation within the industry.
Best Cost Segregation Companies – Buyer’s Guide
What Is Cost Segregation?
Cost segregation is a strategic tax practice utilized by property owners and real estate investors to accelerate depreciation. Normally, commercial properties depreciate over 39 years and residential properties over 27.5 years. However, cost segregation involves breaking down the property into four categories:
- Land assets
- Buildings & structures
- Land improvements
- Personal property
Through this method, certain components of the building can be depreciated on an accelerated schedule of five, seven, or 15 years, effectively reducing tax liabilities and potentially leading to tax refunds. Certain components may qualify for bonus depreciation, offering further tax advantages.
To implement this strategy, a detailed cost segregation study conducted by seasoned professionals is necessary.
Who Qualifies for Cost Segregation?
Cost segregation is available to anyone who has purchased, constructed, or renovated a commercial or residential investment property. This includes retail store owners to landlords renting out properties. It does not apply to primary residences, and only under specific conditions might a second home qualify.
Reputable cost segregation firms often provide a free feasibility analysis to determine eligibility for cost segregation. This analysis includes an evaluation of the property and the owner’s tax situation to see if cost segregation is viable, followed by an estimation of potential tax benefits and a quote for conducting the study.
What is a Cost Segregation Study?
A cost segregation study is conducted by a team of professionals, which may include accountants, engineers, estimators, and tax experts. Attempting a DIY cost segregation study is not recommended due to its complexity and the severe penalties for errors as imposed by the IRS.
Such studies are advisable in the first year a property is placed in service but can also be conducted retroactively through look-back studies to claim previous years’ depreciation.
How Do Cost Segregation Studies Work?
Understanding the workings of a cost segregation study is crucial before engaging a company to perform one.
During the study, the property is meticulously analyzed and assessed, and its components are categorized into four groups. This categorization helps in determining the accelerated depreciation schedule for each component. The study can be done onsite or remotely using various technologies.
After the assessment, a comprehensive report is provided. These reports, often exceeding 30 pages, include detailed lists of categorized assets, property photographs, and supporting references for the study’s findings. This report aids in reporting accelerated depreciation on tax returns, optimizing tax benefits effectively.
What Costs Can Be Written Off On a Cost Segregation Study?
During a cost segregation study, building components are evaluated and sorted into four distinct categories, each with its own depreciation schedule that accelerates the write-off of these components.
The four categories of cost segregation are:
- Personal property: Items such as appliances, signage, furniture, office equipment, and machinery fall under this category and depreciate over five or seven years.
- Buildings & structures: This category encompasses the main building and its integral structural components like roofs, concrete foundations, floors, ceilings, windows, and doors. Residential properties depreciate over 27.5 years and commercial properties over 39 years.
- Land improvements: These depreciate over 15 years and include enhancements like landscaping, exterior lighting, parking lots, sidewalks, and fountains.
- Land assets: This includes the land itself and site work for land preparation, which are non-depreciable.
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Is a Cost Segregation Study Worth It?
Before undertaking a cost segregation study, consider the following:
Cost segregation studies typically start at around $5,000, escalating in price for larger or more complex properties, sometimes exceeding $15,000. While the initial cost may seem high, the potential tax savings often outweigh the initial expenditure, with property owners potentially seeing significant returns within a few years.
Cost segregation isn’t suitable for every property or owner. It’s essential to ensure your property qualifies and to carefully consider the financial pros and cons.
For those unsure about the benefits, using a cost segregation calculator can provide an estimate of potential savings. Alternatively, reaching out to a reputable cost segregation firm for a free feasibility analysis can clarify how much you could benefit from this strategy.
Who Can Benefit From Cost Segregation Services?
Cost segregation services are particularly beneficial for commercial property owners who have recently constructed, purchased, or expanded buildings. Those who have missed depreciation deductions in previous tax years can also benefit, as they can make a one-time “catch-up” adjustment, allowing them to claim missed deductions all at once rather than over several years.
What Are the Benefits of Cost Segregation Services?
Cost segregation services offer commercial property owners considerable tax advantages, enhanced cash flow, and lowered tax liabilities. By reclassifying assets for tax purposes, owners can decrease their overall taxable income and take advantage of tax-deferred investments.
Additionally, these services assist in complying with tangible property regulations, provide necessary documentation for IRS audits, and effectively defer tax payments by treating tax savings as an interest-free loan.
Sub-Services and Features
Here are eight specialized services within our Cost Segregation offerings and their respective benefits:
1. Cost Segregation Analysis: This service accurately identifies assets eligible for cost segregation, significantly lowering tax liabilities and boosting cash flow.
2. Newly Constructed Buildings: We conduct cost segregation studies on new constructions, enabling substantial tax savings through bonus depreciation.
3. Existing Buildings: Our studies can also apply to existing buildings, offering the chance to recapture missed depreciation deductions from past tax years.
4. Purchase Price Allocation: Our specialists can allocate the purchase price of a building to optimize tax benefits, enhancing both cash flow and tax savings.
5. Leasehold Improvements: We identify leasehold improvements eligible for accelerated depreciation, which helps to decrease tax liabilities and improve cash flow.
6. Real Property Analysis: This analysis determines which assets are suitable for cost segregation, potentially leading to significant tax savings through bonus depreciation.
7. Cost Segregation Study Review: Acena reviews your cost segregation study to ensure it complies with IRS guidelines, providing reassurance that your study is both accurate and compliant.
8. Recovery Periods: By categorizing building assets into shorter recovery periods, this service facilitates greater tax savings, increased cash flow, and reduced tax liabilities.
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Best Cost Segregation Companies – FAQs
Final Thoughts
Selecting the right cost segregation company is crucial to maximizing the financial benefits for your investments. Omega stands out due to their rigorous attention to detail, deep understanding of tax laws, and commitment to enhancing returns, making them a reliable choice for investors aiming to optimize their property’s depreciation strategies.
When choosing a cost segregation service, it’s important to evaluate factors such as the provider’s experience, accuracy, and customer service, areas where Omega consistently excels. Using their services can lead to significant tax benefits and increased cash flow, essential elements for sustained success in real estate investment.
Since every property and investor scenario is different, it’s advisable to engage with a professional who can customize their services to suit your specific needs.
