Austin, TX · $1.2M
5,000 SF animal hospital — surgical suite + kennel wing
Year-1 federal benefit
$86,800
Veterinary Clinic / Animal Hospital
Vet cost segregation: $100K–$440K Year-1 deductions.
A veterinary hospital is a building wrapped around surgical suites, kennels, imaging rooms, and a wet lab — one of the densest clinical fit-outs in commercial real estate, and most of it is mis-parked on the 39-year schedule.
The 30-second answer
Veterinary cost segregation is an engineering-based study that reclassifies a clinic or animal hospital's components out of the default 39-year commercial schedule into faster 5-, 7-, and 15-year MACRS classes. It fits practice owners who bought, built, or built out their clinic, because a veterinary fit-out — exam casework, surgical oxygen and anesthesia, imaging power, removable kennels and runs, in-house lab, and specialty floor drainage — is unusually dense with short-lived property. That matters because, with 100% bonus depreciation, the reclassified amount (about 20–26% of building basis, and ~37% when practice equipment is documented) is deductible in Year 1.
Vet cost segregation reclassifies 20–26% 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 | 23–29% | $55K–$205K | From $495 |
| SFR | 15–20% | $30K–$100K | From $495 |
| Condo | 10–12% | $16K–$43K | From $495 |
| Duplex | 14–19% | $33K–$98K | From $795 |
| Fourplex | 17–21% | $68K–$165K | From $795 |
| Office | 17–21% | $100K–$535K | From $1,995 |
| Retail | 21–27% | $105K–$570K | From $1,995 |
| Industrial | 16–20% | $95K–$680K | From $2,495 |
| Self-storage | 20–26% | $170K–$1.3M | From $2,495 |
| Medical office | 16–23% | $95K–$485K | From $2,495 |
| Mixed-use | 12–19% | $71K–$480K | From $1,995 |
| Multifamily | 15–21% | $48K–$150K | From $795 |
| Multifamily 5+ | 15–20% | $120K–$800K | From $1,995 |
| Triplex | 15–19% | $48K–$120K | From $795 |
| Restaurant | 16–24% | $81K–$405K | From $2,495 |
| Vet this page | 20–26% | $100K–$440K | From $2,495 |
| Gym | 19–35% | $110K–$890K | From $2,495 |
| Dealership | 26–36% | $550K–$3.6M | From $2,495 |
| ADU | 7–12% | $8K–$33K | From $495 |
| Commercial | 18–27% | $105K–$685K | From $1,995 |
| Data center | 45–60% | $3.0M–$31M | $4,995–$54,995 (sub-$100M); $100M+ by proposal |
| Senior living | 20–30% | $340K–$2.0M | By proposal |
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 vet 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…
- ✓Owners who bought or built a clinic and depreciate it over 39 years
- ✓Practice acquisitions where imaging, surgical, lab, or kennel equipment conveyed (documented → observed 5/7-yr)
- ✓Tenants who funded their own clinical build-out in a leased space
Skip it when…
- ×Vanilla-shell leases where the landlord funded the entire build-out
- ×Build-out or building basis under ~$400K, where the study fee gets thin against the benefit
Estimate
Run the numbers on your vet.
Pre-set to Vet defaults — adjust price + bracket to match your property.
Estimated Year-1 tax savings · Click to order →
$29,878
on $80,750 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
15×
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
Vet cost segregation, by question.
Do veterinary clinics qualify for cost segregation?
Yes. Any practice that owns its building or its build-out can reclassify the clinical fit-out — exam and treatment casework, surgical oxygen/anesthesia, imaging power, kennels and runs, in-house lab casework, and animal-facility floor drainage — out of the 39-year schedule into 5-, 7-, and 15-year classes. A typical clinic reclassifies 20–26% of building basis, and more when practice equipment is documented.
How much does a veterinary cost segregation study cost?
Veterinary clinics are priced as standard commercial property: from $1,995 for sub-$1M basis, $3,295 for a typical $1M–$3M clinic, delivered as a CPA-ready PDF in under an hour. No site visit required.
I lease and paid for my own build-out — does it still apply?
Yes. A tenant who funded the build-out depreciates that investment, and a veterinary build-out is dense with reclassifiable clinical infrastructure. The study runs on your build-out basis and is reviewed before delivery so the classification matches how the improvements were funded.
I bought my practice years ago — is it too late?
No. A lookback study lets you claim missed depreciation via Form 3115 on your current-year return under the IRS automatic-consent procedures, with no amended returns. The cumulative catch-up flows through in a single year.
Regulation references
The rules that govern vet 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).
Want your own numbers instead?
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