Client Background
A group of medical professionals purchased a new medical office building with a state-of-the-art outpatient surgery center and wanted to reduce their tax burden through accelerated depreciation. The client hired Development Theory to do a cost segregation study for a medical office with a surgery center.
The Challenge
Expensive Medical Equipment & Buildout: The facility contained specialized plumbing, electrical, and equipment installations that weren’t properly classified for depreciation.
High Initial Tax Liability: The medical practice faced a substantial tax burden in the first year after purchase.
Complex Asset Allocation Issues: Many costs were grouped under building expenses, rather than properly classified.
Our Approach
Property & Equipment Breakdown: Conducted a detailed cost segregation study to separate medical equipment, fixtures, and structural components.
Reclassification for Faster Depreciation: Moved $1.9 million worth of assets into 5- and 7-year depreciation categories.
Tax Reduction Strategy for Medical Equipment: Applied accelerated depreciation for specialized surgical and imaging equipment.
Bonus Depreciation Utilization: Maximized first-year deductions by applying 100% bonus depreciation.
Cash Flow Optimization for Expansion Planning: Used tax savings to fund future expansions and equipment upgrades.
The Solution
Reclassified $1.9 million in assets, accelerating depreciation benefits.
Applied bonus depreciation, generating immediate tax savings.
Optimized tax efficiency, reducing overall tax liability.
Results & Impact
Found $780,000 in additional tax deductions, reducing financial strain.
Improved cash flow, allowing for new equipment purchases.
Lowered tax burden for practice owners, increasing net income.
Positioned the practice for future expansion, ensuring long-term growth.
Client Feedback
"This cost segregation study saved us hundreds of thousands of dollars, which we reinvested into new technology for our patients!"
Development Theory Can Help Business Owners Like You
Are you leaving money on the table with slow depreciation? A Cost Segregation Study can accelerate your tax deductions, improve cash flow, and free up capital to reinvest in your business. Whether you own commercial real estate, a rental property, or a specialty facility, our team at Development Theory helps business owners maximize tax savings while staying IRS-compliant. The best time to conduct a study is within the first few years of property ownership or after major renovations—don’t wait to take advantage of these savings.
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