Medical Offices Qualify for Tax Incentives

There are excellent tax incentives for healthcare facilities, which come from taking advantage of accelerated depreciation for certain categories of assets. Under IRS rules, assets are segregated by classes and the depreciation calculation is made, based on the useful life of the asset class. The different classes of assets have a depreciation period that ranges from three years to 39 years.

Commercial structures have the longest depreciation period of 39 years. Equipment used in business qualifies for accelerated depreciation over the period from three to seven years.

Klein Hall CPAs recommends that businesses reduce their current tax burden by taking legitimate deductions whenever possible. It is extremely useful to claim accelerated depreciation in this regard.

Medical offices and healthcare facilities of all kinds are excellent candidates for these tax deductions because of the makeup of the facilities and the equipment used in them. Most would probably understand that medical equipment qualifies for accelerated depreciation; however, it is not as obvious that the piping in the walls, such as water lines, compressed air lines, gas lines, and other structural-like things that are needed to supply the equipment also qualify for accelerated depreciation as well.


Items that Qualify for Accelerated Depreciation

There are many items in healthcare facilities that qualify for accelerated depreciation, and some of them are not obvious. Examples of items that qualify include:

  • Dedicated Electrical and Plumbing Work – These special connections can supply either medical or office equipment.
  • Data Communications Systems – This includes the equipment and all the network wiring connections.
  • Intercom Systems – Even though these systems are usually built-in they are still considered equipment.
  • Sound or Video Systems – These are other built-in systems that qualify.
  • Outdoor Excavation Work – This is a surprising one only the experts know about.

Cost Segregation Study

Klein Hall CPAs works with businesses, individuals, and organizations in the Chicagoland area to help them capture as much of these tax incentives that they are legally entitled to benefit from.

The cost segregation study is a detailed document that specifically identifies items that qualify for accelerated depreciation and then determines a cost for those items by using expense receipts or by making an appropriate estimate when necessary.

An average medical office in the Chicagoland area might receive up to $200,000 in tax incentives, which makes the investment the cost segregation study well worth doing.

Additionally, the extensive and detailed cost segregation study is an analysis tool that is recognized by the IRS as a valid estimation procedure, acceptable for use in preparing tax returns. The supervision of the qualified engineer(s) doing the cost segregation study by Klein Hall CPAs ensures the amounts determined by the engineer that qualify for accelerated depreciation are valid and accurate.


Businesses, especially those in the healthcare industry, which rely heavily on equipment, benefit tremendously by conducting a cost segregation study. The additional deductions for accelerated depreciation have a strong positive impact on the bottom line. Contact Klein Hall CPAs today to discuss how your business can benefit by capturing these tax incentives.

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