What is cost segregation and how does it apply to medical office condos?
Cost segregation is an IRS-recognized tax strategy that reclassifies components of your property—such as specialized plumbing, electrical systems, exam room fixtures, and interior buildouts—from a 39-year depreciation schedule into shorter 5, 7, or 15-year schedules. For medical office condos, this is especially valuable because these properties contain a high concentration of specialized, shorter-life components that standard depreciation completely overlooks.
How much can a medical office condo owner expect to save with cost segregation?
Savings depend on the property's depreciable basis and the density of qualifying components. Seneca's average client achieves a first-year deduction of $171,243. For a medical office condo with a $1M–$3M basis, typical first-year savings range from $75,000 to $200,000. ROI on the study itself frequently exceeds 10:1, meaning for every dollar spent on the study, $10–$25 is returned in tax savings.
What types of components in a medical office condo qualify for accelerated depreciation?
Medical office condos contain numerous components that qualify for 5, 7, or 15-year depreciation. These commonly include specialized plumbing and drain systems, medical-grade electrical and data wiring, exam room cabinetry and casework, HVAC equipment serving specific suites, flooring, wall coverings, lighting fixtures, security systems, and any land improvements. Our engineers identify every qualifying asset to maximize your deduction.
Do I need to have purchased my medical office condo recently to qualify?
No. If you purchased, built, or renovated your medical office condo within the last 15 years and never had a cost segregation study performed, you qualify for a lookback study. Using IRS Form 3115, all missed depreciation deductions can be claimed in the current tax year—without amending prior returns. The process and cost are essentially the same as a current-year study.
How long does a cost segregation study take for a medical office condo?
Most medical office condo studies are completed within 2–4 weeks from the time of property inspection—significantly faster than the industry standard of 4–8 weeks. If you choose our virtual inspection option, turnaround is typically 2–3 weeks. Rush service is available for clients with urgent tax deadlines, with delivery possible in as little as one week.
Does the study include IRS audit protection?
Yes. Every Seneca cost segregation study comes with our included AuditDefense guarantee at no additional charge. If the IRS audits your return in connection with the cost segregation study at any point while you own the property, our team will defend the report, respond to field inquiries, and provide all supporting documentation. If the study has a material issue, we can even refund the cost of the study.
Do I need to hire a new CPA or change my tax advisor to use cost segregation?
No. Seneca works directly alongside your existing CPA or tax advisor. After your study is complete, our team coordinates with your accountant to review the engineering report, integrate the depreciation schedules into your tax returns, and implement any Form 3115 changes for lookback studies. Our post-study CPA coordination support is included at no additional charge and is designed to make implementation seamless.
How much does a cost segregation study cost for a medical office condo?
Study fees are based on the property's size, complexity, and value. For properties with a $300K–$1M basis, studies typically cost $3,000–$12,000. For $1M–$3M properties, fees range from $10,000–$20,000. Given that ROI ratios regularly exceed 10:1, the study often pays for itself many times over in the first year. A free preliminary analysis is available to confirm the study is worthwhile before you commit.