If you are interested in becoming a real estate investor then you may be looking for the secret to rapid growth. You may be surprised to hear it isn’t just about finding the right property, but keeping as much of your profits as you can. This is where cost segregation comes into play, this happens to be the single most powerful tax strategy for real estate investors and property owners. This allows you to accelerate depreciation and unlock bigger cash flow early on in the ownership.
It is important to understand that not all cost segregation studies have been created equally. In order to help you navigate this busy market, we have done the research of best cost segregation companies so you don’t have to.
Check out the list below to find out more about who they are, what they offer, and whether they would be any good for you as a property owner.
R.E. Cost Seg
R.E. Cost Seg is based in Houston, Texas. However, they cover the whole of the states so you don’t have to worry about being located elsewhere in America. If you want to buy property outside of the states then you will need to find another cost segregation company to help you. What sets R.E. Cost Seg apart from the rest? Well, reports are built for seamless integration into CPA workflows, with asset schedules, workpapers, and summaries designed for both technical precision and strategic decision-making. This awesome company has grown significantly to become one of the favorites among modern day investors.
This one is best for those who love using tech to make their life as a property investor much easier. It may not be great if you are a bit more old school and not trust using tech to save money.
Pros
- The team is well and truly capable of achieving great results, they have a combined total of over $1 billion in tax savings.
- They use an advanced dashboard with their clients to produce real time project tracking and document management.
- Even though they use fully automated systems to produce reports and tracking, they also have people overseeing these reports so the information is accurate.
- The company is totally flexible with everything they offer, from rapid reports for smaller companies and bigger, on-site visits for larger portfolios.
Cons
- Their virtual-first approach may not suit everyone, especially old school business owners and property investors.
- Not suitable for properties under $250,000. The cost of the studies would outweigh the tax benefits.
- As they are only located in the USA, this limits your opportunities especially if you wish to buy abroad.
KBKG
Now, here is the gold standard in cost segregation companies. Established in 1999, they are widely recognized for their balance of high-level engineering expertise and accessible technology. This is a great company if you are a smaller property investor looking for tax savings.
They have offices nationwide so no matter where in the states you are located, you can gain access to one of their Certified Cost Segregation Professionals (CCSPs). If you have smaller rental companies and don’t need big expensive studies and reports, you can use their residential cost segregation tool.
Pros
- You can gain up to eight hours of support for your studies when using KBKG, at no extra cost. Their reports also rarely ever cause reg flags, they are highly conservative and CPA-friendly.
- Unlike the bigger high end firms, you are able to use their self service tool if you make under $1.5 million. This makes it entirely viable for single-family rentals.
- They tick all of the boxes when dealing with the IRS including a detailed engineering approach which involves site inspections and blueprints.
- KBKG can brag about having the highest numbers of CCSPs on their books. This certificate is one of the highest credentials in the tax field.
Cons
- If your property is too big and expensive for the DIY software, then it can quickly become quite pricey for full services.
- You may get less tax savings compared to using a more aggressive firm. This is because KBKGs estimates are slightly more conservative.
- Some reviews have stated that clients feel the company is too corporate and offer a less personalized service.
CSSI (Cost Segregation Services, Inc.)
CSSI is one of the oldest speciality tax firms in the States, they are also the largest. They have a grand total of over 50,000 studies to their name, and they are proud of it. Their business model differs significantly from boutique firms like R.E. Cost Seg and KBKG. They are best to use if you have a large volume of properties. They tick the boxes of all IRA requirements including using ‘the certain method’. If you need to write off old assets then CSSI can also help you achieve this, for instance a roof that you replaced.
If you only deal with low property prices then you may not wish to use CSSI, but one of the other companies. By the time you factor in the cost of engineering site visits, this company is best for investors with properties costing over $500,000. They charge a flat fee based on your building rather than the tax savings. This is typically considered best practice for independence.
Pros
As they have previously completed plenty of studies, they are likely to already have completed one on a building exactly like yours. This makes it easier to get reports and studies.
CSSI is an engineering-first approach rather than a virtual-first approach, this ticks many boxes when it comes to IRS requirements. They use the gold standard for audit defense which is a ‘detailed engineering approach’. They carry out physical site visits which many other companies skip.
If you are wanting to see your potential ROI before parting with any money then CSSI can offer you this. You can gain access to a free preliminary analysis report. On this you can see your estimated returns for 5, 15, and 27.5 year reclassifications.
You will receive a lifetime of audit support. If the IRS ever questions your reports, engineers at CSSI will defend your study in person.
Cons
You won’t necessarily deal with the same agent time and time again. CSSI operates through independent representatives or agents. So, the work and reports received might not always be the same quality.
You can expect to pay higher prices than DIY software tools as you always get an on site engineer visit with CSSI. so, if you are working on a tight budget then they may not be suitable.
We do hope you found this article helpful and it gave you some ideas on which are the best cost segregation companies to use for your real estate investments.
Thanks for stopping by!
Magda
xoxo
This content is for informational purposes only and does not constitute financial advice. Always seek professional advice before making financial decisions.