Why medical office buildings reclassify well in California
California is the largest U.S. real estate market by basis, but high state income tax rates make federal cost segregation deductions especially valuable. California decouples from federal bonus depreciation, so studies model both federal and California books separately.
Medical Office properties have a particular profile that makes cost segregation especially valuable: specialty plumbing, dedicated electrical, lab + imaging suites. The shell sits on a 39-year recovery period under MACRS — but every medical office is hundreds of components, many of which qualify for 5-, 7-, or 15-year recovery and accelerated bonus depreciation.
Typical reclassification ratio
For a medical office in California, TDA studies typically reclassify 28–38% of depreciable basis. Combined with 100% OBBBA bonus depreciation on property acquired and placed in service after January 19, 2025, that translates the entire reclassified amount into a year-one deduction.
California markets we serve
We deliver medical office cost segregation studies across California, including Los Angeles, San Diego, San Jose, San Francisco, Sacramento. Engineering-based methodology and RSMeans cost data on every engagement.