Medical Office Buildings
Medical Office Cost Segregation
Medical office buildings carry some of the highest reclassifiable percentages in commercial real estate — 25–45% of the depreciable basis. Specialized medical gas systems, imaging-suite electrical, exam-room buildout, and lab-grade finishes all qualify for accelerated 5-year recovery under IRS guidelines. A cost segregation study unlocks that deduction in the first year you own the building.
See if my MOB qualifies
$4,000–$14,000
About 80% cheaper than the $40K–$70K a traditional engineering firm charges for the same IRS-compliant, audit-ready result.
Delivered in days
AI-assisted engineering returns a full study in days — not the weeks or months a traditional firm takes — so you can close the tax year on your schedule.
IRS ATG-compliant
Built to the IRS Cost Segregation Audit Techniques Guide with full asset detail, engineer sign-off, and documentation that survives scrutiny.
Why medical office buildings benefit more than most
A generic office building might reclassify 15–20% of its depreciable basis. Medical office buildings regularly reach 25–45% — because the tenant build-outs are dense with short-life personal property. Every exam room has dedicated casework, specialty lighting, and plumbing rough-ins. Imaging suites require hardened electrical feeds and dedicated HVAC. Medical gas systems run throughout the building and are treated as tangible personal property, not a structural component, under the IRS Cost Segregation Audit Techniques Guide.
Under IRC §168(k) bonus depreciation, all of that 5-year property can be deducted in full in the year placed in service. For a $10M MOB acquisition with 30% reclassified, that is $3M of 5-year property — a first-year federal deduction of $3M rather than $77K (the 39-year straight-line equivalent). At a 37% effective rate, the net present value of that acceleration often exceeds the entire cost of the study many times over.
| MOB asset | Reclassified to |
|---|---|
| Medical gas systems (O₂, N₂O, vacuum piping) | 5-year |
| Dedicated electrical for imaging equipment (MRI/CT/X-ray) | 5-year |
| Exam-room casework, millwork & built-in cabinetry | 5-year |
| Lab-grade flooring (epoxy, vinyl composition tile) | 5-year |
| Nurse call & patient communication systems | 5-year |
| Specialty HVAC for imaging suites & clean rooms | 5-year |
| Parking lots, driveways & site lighting | 15-year |
| Canopies, covered entries & site signage | 15-year |
| Landscaping & perimeter fencing | 15-year |
IRS-compliant and audit-defensible
The IRS Cost Segregation Audit Techniques Guide (ATG) — the document IRS agents use when auditing cost segregation studies — explicitly identifies medical gas systems, specialty electrical, and exam-room components as personal property. Our studies cite chapter and verse from the ATG for every reclassified asset, so there are no grey-area positions.
Each study includes engineer-of-record sign-off, a complete asset schedule at the component level, and documentation that maps every dollar to its source in the construction cost breakdown. The result is a study that holds up under scrutiny — not just one that looks good on paper.
Because medical office tenants negotiate detailed build-out allowances and construction contracts, the documentation trail is typically excellent — which means a higher-quality study and stronger audit position than comparable asset classes.
ATG Chapter 7.3 — Personal Property
Medical gas, specialty electrical, and exam-room casework are cited by IRS guidance as examples of personal property — the foundation of every MOB reclassification.
Component-level asset schedule
Every reclassified item is listed individually with its cost, recovery period, and IRS authority. No lump-sum estimates.
Look-back studies (IRC §481(a))
Own a MOB you acquired years ago? A look-back study catches up all missed accelerated depreciation in a single year — no amended returns required.
Bonus depreciation coordination
We flag which reclassified assets qualify for IRC §168(k) bonus depreciation and include the Year-1 deduction impact in the executive summary your CPA needs.
Medical office cost segregation FAQ
How much does a medical office building cost segregation study cost?
Our MOB studies run $4,000–$14,000 depending on building size and document quality — about 80% less than the $40,000–$70,000 a traditional engineering firm charges — and are returned in days, not weeks.
How much of a medical office building can be reclassified?
Medical office buildings typically reclassify 25–45% of depreciable basis into 5- and 15-year property. The high percentage is driven by tenant-specific buildout: medical gas systems, exam-room casework, specialty electrical for imaging equipment, lab-grade flooring, and site improvements all qualify for accelerated recovery under IRS guidance.
Do medical gas systems and imaging suite electrical qualify for accelerated depreciation?
Yes. Medical gas piping (oxygen, nitrous oxide, vacuum), dedicated high-voltage electrical feeds for MRI/CT equipment, and equipment-specific HVAC are classified as 5-year personal property or 15-year land improvements under IRS Rev. Proc. 87-57 and the Cost Segregation Audit Techniques Guide because they serve a specific medical function rather than the building shell.
Can a cost segregation study be done on a MOB that was purchased, not newly constructed?
Yes — a "look-back" study under IRC §481(a) allows you to catch up on all missed accelerated depreciation in a single tax year, with no need to amend prior returns. This works for acquisitions going back many years and often produces a six- or seven-figure catch-up deduction.
Is a medical office cost segregation study audit-defensible?
Our studies are built to the IRS Cost Segregation Audit Techniques Guide (ATG) with full asset-level detail, supporting site-visit documentation, and engineer-of-record sign-off. The ATG explicitly describes medical gas, specialty electrical, and exam-room components as reclassification candidates — so the position is well-established, not aggressive.
How long does it take?
Upload your closing statement, construction contracts or AIA schedules, and property photos and most MOB studies are delivered within a few business days.
Ready to accelerate your MOB depreciation?
Get an IRS-compliant, ATG-built study in days for a fraction of traditional cost. Medical office buildings are among the strongest performers — find out what yours qualifies for.
See if my building qualifies