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Timing is everything, especially true in real estate. Now is the time to consider cost segregation for your medical facility.
Whether you own or lease a medical building, dental office, clinic or are a commercial real estate broker who works with medical leasing/owning……then you should consider a cost segregation study for your property/client.
Our cost segregation studies have reduced our health care clients’ taxes on a range of buildings, including:
COST SEGREGATION FOR YOUR LOAN
Whether you are looking at a commercial loan to purchase or lease a property or to finance improvements, including cost segregation in the commercial loan process, will improve the quality and security of a loan for the lender and enhance cash flow for the borrower. The impact of including cost segregation can be staggering. The effective debt service coverage can go from 1.22 before CS to 1.84 after a CS Study. What was once a good loan, becomes a great loan.
For Medical Leased Space:
When negotiating your new lease, it is also very important to incorporate in your lease language that it will allow you, not your property owner to take the depreciation on your space improvements. In most leasing situations, the property owner will contribute money toward your construction budget—Tenant Improvement (TI) allowance—as an inducement to rent the space.
This allowance, plus additional funds you invest in your improvements and medical equipment is can bring significant cash flow to you by engaging in a “fully engineered” cost segregation study.
Cost Segregation, Your Competitive Advantage – Specifically for the Medical Practice
The medical industry has been dealing with significant obstacles over the years and now with the IRS TCJA 2018 is the time to consider how to reduce taxes using engineering solutions for your medical facilities for a purchase, ground up, leasehold improvement and/or renovations.
Our super performing cost segregation studies can be vital to a medical facilities bottom line. It allows the taxpayer to reclassify as much as 25 percent to 50 percent of a medical building into the shorter-lived personal property asset classes than traditional “accounting method”. Just when you thought it could not get better there can be additional benefits found in “looking back” in the past to reclaim unrecognized depreciation deductions. Amended tax returns are not required; instead, a “catch-up” depreciation can be taken in one year by filing IRS Federal Form 3115 Change in Accounting Method, with IRS consent granted automatically.
CONCLUSION
The Journal of Tax Accountancy has stated that …without a doubt, a cost segregation study is among the most valuable tax strategies available to owners of commercial real estate. The sooner the medical community becomes educated; the sooner owners can begin to realize substantial increases in cash flow, which in turn encourages additional business spending and investment.