Multi-tenant Medical Office Building

Approach & Results

A CPA firm engaged McGuire Sponsel to carry out a cost segregation study for a multi-tenant medical office building located in Winter Park, Florida. The client had recently purchased this property for $5.3 million and sought to optimize their tax strategy for this significant investment.

Leveraging our Fixed Asset Services team’s expertise in engineering, construction, architectural design, and in-depth understanding of IRS depreciation guidelines, we conducted a comprehensive cost segregation analysis of the newly acquired medical office building. Our team conducted a thorough site visit, examining the property in detail and reviewing all relevant documentation. This comprehensive approach allowed for the precise identification and reclassification of assets into shorter depreciation categories.

The entire study spanned a duration of four months and delivered compelling results for our client. Over 22% of the depreciable basis was reclassified from 39-year property into 5- and 15-year property, yielding an increased first-year cash flow of over $364,000, exceeding the original projection by more than $108,000. Personal property assets eligible for bonus depreciation accounted for over $997,000, and the net present value of cash flows over the life of the investment exceeded $230,000. This strategic reclassification not only provided immediate tax benefits but also enhanced the long-term financial outlook for the client’s investment in the medical office building.