Changes that evaluators are introducing to cost segregation analysis and reporting are addressing in Kenyan Real Estate Industry

The size of the property being analyzed, the age of the property, and an affordable price point. Kenyan-real-estate. com, a nationwide Kenyan Real Estate service firm, is taking advantage of such techniques to effect these beneficial changes

1. Owners of property with an improvement basis as low as Kshs.800, 000 can benefit from cost segregation. This compares to the limited properties worth Kshs.500 to Kshs.40 million and above that previously benefited. 

2. Existing properties built or purchased after 2006 offer significant savings in year-one of cost segregation, even without producing original cost documents. Capturing non-segregated depreciation from prior years is perfectly allowable by the KRA. This compares to firms previously applying the methodology only to new construction. 

3. Fees are no longer prohibitive. To prepare an analysis and report for many small properties, prices are low enough to generate at least 3 times the report cost in the first year. 

This compares to the traditional fees ranging from Kshs.870, 000 to Kshs.1.6M and up for comparable size properties.

It is wise to keep the owner’s documents or tax preparer abreast throughout the process. For older properties, the documents may need to complete some forms to submit with the tax return so the owner can realize savings on items not previously depreciated - without filing an amended return. 

Income producing properties worth as little as Kshs.44M can achieve a 3:1 payback ratio of tax savings over the modest price of a cost segregation report. If owned for 3 or more years, the typical payback ratio is 10:1.   

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