Commercial · 39-year property
Cost Segregation for Medical and Dental Offices
A clinical build-out is one of the densest concentrations of five-year property in commercial real estate. The building may be ordinary; the fit-out is not.
Clinical infrastructure is not building infrastructure
Operatory casework, dedicated electrical for chairs and imaging, medical gas and vacuum piping, nitrous manifolds, compressed air, dedicated plumbing at each operatory, lead-lined walls and doors serving imaging equipment, sterilization suite fit-out and specialty exhaust all exist to serve equipment, not to serve the building. In a dental practice with eight to twelve operatories, that infrastructure can be a third or more of the interior construction cost.
Practice owners and their entity structure
Many medical and dental owners hold the real estate in one entity and operate the practice in another. That is usually good news for a study, because it separates the building basis from the equipment and clarifies who takes which deduction. It also raises grouping and material participation questions worth working through before the study rather than after.
Component takeoff
What we pull out of medical & dental offices
Grouped by the recovery period each component lands on. This is representative, not exhaustive — the takeoff on your building will be longer.
- 5Operatory and exam-room casework, cabinetry and countertops
- 5Dedicated electrical, isolated grounds and equipment power drops
- 5Medical gas, oxygen, nitrous and vacuum piping and manifolds
- 5Compressed air systems serving clinical equipment
- 5Lead shielding for radiography and imaging rooms
- 5Specialty plumbing at operatories, sterilization and lab sinks
- 5Sterilization suite casework and specialty exhaust
- 5Nurse call, paging and clinical data cabling
- 5Decorative lighting, flooring, wall protection and signage
- 7Waiting-room and administrative furniture
- 7Non-affixed clinical equipment retained by the owner
- 15Patient parking paving, striping, ADA access and canopies
- 15Sidewalks, entry hardscape and covered drop-off structures
- 15Site lighting, monument signage foundations, flagpoles
- 15Landscaping, irrigation and screening walls
- 15Storm drainage and site utilities
- 15Qualified improvement property from suite build-outs after occupancy
- 39Shell, structure, roof and exterior envelope
- 39Base HVAC serving the building generally
- 39Core restrooms, corridors and general electrical service
Questions
How much of the basis usually reclassifies on this property type?
Studies on medical & dental offices typically move 24% to 36% of depreciable basis into 5, 7 and 15-year classes. That is a planning range from comparable buildings, not a promise — the number that ends up on your return comes from the actual takeoff.
What documents do you need?
The closing statement, the current depreciation schedule and the property address at minimum. Construction records, drawings, pay applications and change orders make the work more precise and often cheaper.
I bought this several years ago. Is it too late?
No. As long as you still own it and placed it in service after 1986, a look-back study captures every missed deduction and brings it forward on the current return via Form 3115. No amended returns.
Related
Other property types
The study is one piece. We can handle the rest of the return.
Deprecio is part of the Shurek Accounting & Tax family of brands. If you want the study and the tax work under one roof — the return, the Form 3115, entity structure, quarterly estimates, multi-state filings — that is a single engagement, not a hand-off between two firms.
No-cost feasibility review
Find out what your building is hiding.
A feasibility review is free and takes about twenty minutes. Bring the closing statement and the depreciation schedule; we will tell you plainly whether a study pays for itself.