Medical office cost segregation

Healthcare buildings have the richest short-life profile of any property type.

Medical offices, dental practices, surgery centers, urgent care, and imaging facilities are full of dedicated systems most cost-seg providers miss: medical gas, vacuum, deionized water, three-phase imaging power, lead shielding, and exam-room millwork. TDA's engineering-based study captures every line item — typical reclassification is 25–35% of basis.

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Medical offices & healthcare

Medical-grade plumbing, electrical, and gas systems reclassify aggressively.

Medical buildings carry significant specialty MEP — medical gas piping, dedicated electrical for imaging equipment, specialty plumbing for exam rooms and ORs, lead shielding, HVAC zones for infection control — that’s textbook 5- and 7-year personal property tied to medical use.

Typical reclassification: 22–32% of basis. Particularly powerful for owner-occupied dental, surgical, and imaging facilities.

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Specialty MEP segregationMedical gas, imaging electrical, infection-control HVAC — all classified individually.

What we reclassify in a medical office

5-year personal property

Dedicated electrical for imaging, lab, and operatory equipment
Medical gas, vacuum, oxygen, and nitrous lines
Specialty millwork — exam rooms, dental ops, sinks
Decorative lighting and dental chair rough-ins
Lab plumbing (deionized water, acid waste)

15-year land improvements / QIP

Patient parking, lighting, signage, ADA
Tenant build-out improvements (QIP)

Reclassification benchmark

Standard medical office reclassifies 25–35%. Surgery centers and imaging suites — with heavier dedicated systems — frequently reach 35–45%.

Medical pool	Typical %
39-year real property	60–70%
15-year land improvements / QIP	10–15%
5-year personal property	15–25%

Sample — $5M medical office

~$1.4M

First-year deduction with 30% reclassification on $4.4M depreciable basis under 100% bonus.

FAQ

Medical office cost segregation, answered

Why do medical offices reclassify so well?

Healthcare buildings have unusually rich short-life property: dedicated electrical for imaging and lab equipment, specialty plumbing (medical gas, vacuum, deionized water), millwork at every exam room, dental chairs, and lead-lined walls. Most medical offices reclassify 25–35% of basis.

What about lead-lined imaging rooms?

Lead-lined walls in imaging suites are a building component but the supporting framing and dedicated power often qualify as 5-year property when serving specific imaging equipment. Classification depends on whether the construction is integral to the building or specific to the equipment.

I'm a physician-owner — what's the entity structure?

Many physician-owners hold the building in a separate LLC and lease it to the practice. The cost segregation study runs against the LLC, generating depreciation that reduces the building rental income (or creates a loss that offsets other passive income). Your CPA will structure for optimal §469 treatment.

Healthcare buildings have the richest short-life profile of any property type.

Medical-grade plumbing, electrical, and gas systems reclassify aggressively.

What we reclassify in a medical office

5-year personal property

15-year land improvements / QIP

Reclassification benchmark

Medical office cost segregation, answered

Free feasibility on your medical office