Scottsdale, AZ · $1.9M
Dental practice with chairside imaging
Year-1 federal benefit
$113,500
Medical / Dental Office
Medical office cost segregation: $84K–$540K Year-1 deductions.
Specialty MEP — exam-room plumbing, gas lines, lead-lined imaging walls, sterile water — pushes medical office reclassification well above general office.
The 30-second answer
Medical and dental office cost segregation is an engineering-based study that reclassifies a clinical office's components out of the default 39-year commercial schedule into faster 5-, 7-, and 15-year MACRS classes. A clinical office reclassifies far more than a plain office because the fit-out is dense with specialty infrastructure: exam and procedure casework, medical-gas distribution (oxygen, vacuum, nitrous, medical air), scrub sinks and specialty plumbing, dedicated imaging power and cooling, nurse-call and clinical low-voltage, and procedural lighting are all 5-year personal property when owned and documented. With 100% bonus depreciation the reclassified amount (about 16–23% of building basis, more when imaging and clinical equipment is documented) is deductible in Year 1.
Medical office cost segregation reclassifies 16–29% of depreciable basis from the 27.5- or 39-year shell into 5-, 7-, and 15-year MACRS classes per 26 U.S.C. § 168 and Rev. Proc. 87-56. Under OBBBA's permanent 100% bonus depreciation (placed-in-service 2025+), reclassified components are deductible in year one. All credible cost-seg providers use the same federal framework — industry-standard 2026 construction cost data, MACRS classification, IRS Audit Techniques Guide (Pub 5653) compliance. What differs across property types is land-allocation share, FF&E weight, and material-participation eligibility under §469.
| Property type | Reclass to 5/7/15-yr | Year-1 federal benefit | Study cost |
|---|---|---|---|
| STR | 20–39% | $48K–$280K | From $495 |
| SFR | 8–32% | $16K–$165K | From $495 |
| Condo | 10–17% | $16K–$61K | From $495 |
| Brownstone | 5–20% | $60K–$640K | From $495 |
| Rowhouse | 5–18% | $10K–$170K | From $495 |
| Duplex | 13–21% | $31K–$105K | From $995 |
| Fourplex | 16–29% | $64K–$230K | From $995 |
| Office | 16–29% | $84K–$650K | From $1,995 |
| Retail | 20–37% | $90K–$690K | From $1,995 |
| Industrial | 15–28% | $78K–$840K | From $2,495 |
| Self-storage | 19–36% | $140K–$1.6M | From $2,495 |
| Medical office this page | 16–29% | $84K–$540K | From $2,995 |
| Mixed-use | 12–23% | $63K–$515K | From $1,995 |
| Multifamily | 15–28% | $48K–$200K | From $995 |
| Multifamily 5+ | 14–26% | $110K–$1.0M | From $1,995 |
| Triplex | 14–26% | $44K–$165K | From $995 |
| Restaurant | 16–29% | $72K–$430K | From $2,995 |
| Vet | 19–36% | $85K–$540K | From $2,995 |
| Gym | 21–40% | $110K–$900K | From $2,995 |
| Dealership | 25–47% | $465K–$4.2M | From $2,995 |
| ADU | 7–14% | $8K–$39K | From $495 |
| Commercial | 18–34% | $94K–$765K | From $1,995 |
| Data center | 43–65% | $2.5M–$29M | $4,995–$54,995 (sub-$100M); $100M+ by proposal |
| Senior living | 21–39% | $315K–$2.3M | By proposal |
| Funeral homes | 18–30% | $135K–$900K | By proposal |
| Child day care | 15–28% | $56K–$630K | From $2,995 |
| Adult day care | 14–26% | $78K–$780K | From $2,995 |
| Church | 10–22% | $37K–$825K | From $2,995 |
Reclassification ranges from internal benchmarks across 4,000+ studies; Year-1 federal benefit assumes 37% bracket and full first-year usability. Study costs are Cost Seg Smart pricing — comparable engineering studies elsewhere range $5,000–$15,000+. See full provider comparison.
Real examples
What medical office cost seg looks like in practice.
Estimates assume 37% federal bracket and full first-year usability of the loss (active income offset or REPS). Your actual benefit varies with bracket, basis allocation, and CPA's treatment.
Good fit when…
- ✓Owner-operator physicians or dentists who built out the suite
- ✓Medical office buildings with significant specialty MEP
- ✓Practices with imaging suites, sterile-area plumbing, or specialty lighting
Skip it when…
- ×Vanilla shell space leased to a medical tenant where you didn't pay for the build-out
Estimate
Run the numbers on your medical office.
Pre-set to Medical office defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$26,363
on $71,250 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →5-yr15-yr27.5/39-yr
Study cost
$1,995
ROI on study
13×
Delivery
< 1 hour
Estimate based on industry-standard 2026 construction cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
Frequently asked
Medical office cost segregation, by question.
Do medical and dental offices qualify for cost segregation?
Yes — a clinical office reclassifies more than a plain office because the fit-out is dense with specialty infrastructure. Exam and procedure casework, medical-gas distribution (oxygen, vacuum, nitrous, medical air), scrub sinks and specialty plumbing, dedicated imaging power and cooling, nurse-call and clinical cabling, and procedural lighting are all 5-year personal property when owned and documented. A typical practice reclassifies roughly 16–23% of building basis, more when imaging and clinical equipment is documented.
Is medical gas piping and exam casework 5-year property?
Generally yes. Medical-gas distribution (oxygen, vacuum, medical air, nitrous) and specialty plumbing serve identifiable medical equipment rather than the building's general systems, and exam-room sink cabinets and procedure counters are removable trade-fixture casework — both typically depreciated over 5 years. The classification of any specific asset depends on its facts and is confirmed in the study.
Is imaging equipment like a CBCT or X-ray reclassified?
Yes, when you own it and it is documented — the equipment books as 5/7-year personal property, and the dedicated power, cooling, structural reinforcement, and mounts that serve an imaging suite are 5-year property because they serve identifiable medical equipment. It is captured only when the imaging suite and equipment are actually present and documented.
I lease my office and paid for the build-out — does it apply?
Yes, and often more strongly. A tenant who funded the clinical build-out depreciates that investment, and with no land or 39-year shell to strip out, a medical build-out reclassifies far more of its cost. That is handled as a tenant-improvement study on your build-out basis.
How much does a medical or dental office cost segregation study cost?
Medical and dental offices are priced on the specialty-commercial ladder: from $2,995 for a sub-$1M basis and $4,995 for a typical $1M–$3M practice, delivered as a CPA-ready PDF, usually the same business day. Remote for most residential and small-commercial studies; on-site observation for larger commercial projects.
Regulation references
The rules that govern medical office cost segregation.
- Real estate professional status (REPS) — the 750-hour and 51% tests under 26 U.S.C. § 469(c)(7), and the seven material participation tests under Treas. Reg. § 1.469-5T. Required to offset W-2 income with long-term rental losses unless the property qualifies under the STR loophole.
- Form 3115 (catch-up depreciation) — how to apply cost segregation to a property placed in service in a prior year. Full § 481(a) catch-up adjustment, automatic change-number 7, no IRS user fee.
- Treas. Reg. § 1.469-1T — full reference — all six (A)–(F) exceptions that reclassify a rental as non-rental for passive activity loss purposes.
- Regulations hub — full canonical reference for all cost segregation regulations.
- irsdepreciationrules.com — companion plain-language reference for the underlying IRS depreciation statutes (operated by Cost Seg Smart).
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