Cash Flow Enhancement

Mr. Shipman helps practices improve their bottom line through Improved Efficiency, Lower Taxes, Improved Collections, and Lower Lease Rates.

Blog By:
Josh Shipman

In February 2021, a dentist purchased a 3,330 sq. ft. free standing dental office on 0.3 acres. Excluding dental equipment and land value, the dentist's cost basis came in at $866,592. From this, 33% of the building and site improvements were identified as being eligible for accelerated depreciation. If the dentist straight-lined this asset, his 2021 accumulated depreciation expense would only be $19,472. However, because he cost segregated the practice his accumulated depreciation expense, with 100% bonus, ended up being $305,799. This increase in accumulated depreciation will save him roughly $105,000 in deferred income tax.

Ultimately as an owner of a commercial property you have the choice. You can either take accelerated tax savings now, or wait 39 years for the same benefit. The first option allows you an opportunity to recover a significant amount of the down payment as well as the ability reinvest the deferred tax over the hold period. With the second option the government manages your money.