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Medical & dental office build-out cost segregation

Exam rooms, operatories, imaging rooms, casework, dedicated electrical and medical-grade plumbing — a clinical build-out is MEP-heavy and reclassifies far more than the building it sits in.

Start your study → Typically reclassifies 70–90% of build-out cost

Dental and medical office cost segregation analyzes the clinical build-out you funded as the tenant. These build-outs are casework- and MEP-intensive: built-in cabinetry, operatory and exam casework, dedicated circuits for imaging and chairs, medical-grade plumbing and vacuum/air systems, sterilization and lab connections, and nurse-call/low-voltage are 5- and 7-year property. Partitions, ceilings, and interior distribution are 15-year QIP. As a tenant you fund none of the structural shell, so 70–90% of a clinical build-out typically reclassifies.

Operatories, imaging rooms, and dedicated clinical MEP make a dental or medical build-out one of the most reclassification-rich tenant studies — the casework alone often runs to six figures.

The basis analyzed is your build-out cost — not a property purchase price (you don't own the building). Ranges below are illustrative engineering estimates as a share of that build-out cost.

Dental operatory built-in casework and delivery unit — 5- and 7-year property in a cost segregation study

What reclassifies in a medical & dental build-out

Component MACRS life Basis share
Operatory / exam-room casework & built-ins
Chair-side cabinetry, sterilization centers, reception millwork
 5 / 7-year 10–20%
Dedicated electrical for imaging, chairs & equipment
Equipment-specific circuits vs. general building service
 5-year 5–11%
Imaging / x-ray room improvements
Shielding and connections evaluated per component
 5 / 15-year 2–6%
Medical-grade plumbing, vacuum & compressed air
 5 / 15-year 4–9%
Sterilization, lab & specialty equipment connections
 5-year 2–6%
Nurse-call, data & low-voltage systems
 5-year 1–4%
Specialty flooring & wall protection
 5 / 15-year 2–6%
Interior partitions, ceilings & finishes
 15-year QIP 10–18%

This is the segment-specific view. For the full 5- / 7- / 15-year QIP framework and primary sources, see the tenant-improvement cost segregation overview →

Worked example

Scenario
Multi-operatory dental / medical office build-out
Build-out basis
$900,000
Illustrative reclassification
78% = $702,000 into accelerated MACRS
Estimated year-1 deduction
$702,000 (100% §168(k) bonus on eligible property)
Estimated federal tax savings
$260,000 at 37% marginal
Study fee
$2,995

How the $900,000 build-out splits by MACRS class

Recovery class Reclassified amount % of build-out
5-year personal property$342,00038%
7-year property$90,00010%
15-year QIP & land improvements$270,00030%
39-year (remaining structural)$198,00022%

Illustrative and modeled — year-1 figures depend on build-out scope, §168(k) eligibility, §469 status, entity structure, and your CPA's tax position when the deduction lands. Not a filing figure. Every leasehold order is reviewed by our team before delivery.

Frequently asked

How are imaging / lead-lined rooms treated?
Component by component. Equipment-specific power, shielding tied to a piece of imaging equipment, and the equipment connections are evaluated on their function and documentation rather than assumed into the 39-year shell. We classify each with stated rationale per Rev. Proc. 87-56 and IRS Pub 5653.
Does it matter that I lease the suite rather than own the building?
That's exactly why this is the right study. You funded the clinical build-out, not the building — so the basis we analyze is your build-out cost, with no land or shell to strip out. That's what drives the higher reclassification.
I built my practice out three years ago. Too late?
No. A Form 3115 change in accounting method can catch up the previously-missed accelerated depreciation as a §481(a) adjustment in the current year, without amending prior returns. We provide the workpaper pack; your CPA files the form.

Keep going

Everything you need to scope a dental office cost segregation engagement:

Other tenant build-out studies

You paid for the build-out. Get the depreciation you're owed.

Start your study and upload your build-out documents, or send your depreciation schedule and construction budget and we'll talk it through. Every leasehold order is reviewed by our team before delivery.