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accelerate 30% or more of a medical office building���s assets into five- and 15-year classifications. The five-year class is considered tangible personal property under IRC Sec. 1245. The 15-year class is considered land improvements and can be considered under both IRC Sec. 1245 and 1250, depending upon the circumstances. Here is a good example of why you might want to consider it: A group of doctors purchases a multitenanted medical office building for $5 million. A cost segregation study reallocates 30% to short-life asset classes. The accelerated depreciation would be over $1 million. The typical physician is in the 35% income tax bracket, thus resulting is an additional $350,000 in federal income tax credits applied to the initial six years of ownership. Just think of all the additional opportunities this money can create for a practice. You could hire more staff, acquire new equipment or negotiate lower interest rates. It doesn���t create savings just for existing property looking backwards in time; cost segregation actually can deliver more savings in ground-up development. By applying cost segregation to ���preconstruction,��� many assets can be designed and built differently. This difference changes the asset classification, thus creating five- and 15-year assets before constructed. Now, that same medical office building with 30% reallocated to short-life classes can reach closer to 50%. i Have great accountants. can���t they do this? They can, but typically at only a very high level. The IRS requires that a study be ���performed by ���qualified��� individuals or firms, such as those employing ��� personnel competent in design, construction, auditing, and estimating procedures relating to building construction.��� Your current CPAs may not qualify or be the best suited to perform this study. You are not replacing your accounting firm. A cost segregation specialist will work hand in hand with your existing accountants. As hospitals and private practices are looking for ways to save some capital, cost segregation is a great prescription. Brian M. Balash, CCIM, is a licensed sales agent specializing in medical and corporate real estate at Pyramid Brokerage Co., a Cushman & Wakefield Alliance Partner with 10 offices across upstate New York. He is involved with Cushman & Wakefield���s Healthcare Practice Group. The Healthcare Practice Group is a national platform of real estate professionals specializing in various sectors of the health care industry, such as leasing, acquisition and disposition, and management of highly integrated, state-of-the-art medical facilities. For more information, Balash can be reached at (315) 445-8506 or bbalash@pyramidbrokerage.com. ��� The Difference is in the Details Peter L. Derrenbacker CLU, ChFC, CFP�� Specializing in life, diSability and long-term care inSurance for phySicianS and medical groupS 34 Aspen Park Blvd. East Syracuse, NY 13057 Phone (315) 437.7677 Fax (315) 437.7615 email: pderrenbacker@derrenbackergroupbenefits.com www.derrenbackergroupbenefits.com