Gregory N. Lewis, CPA

When physicians or medical groups look for investment opportunities, there are various options available. Real estate can be an attractive option for medical professionals. There are a number of advantages to investing in real estate; however here are some of the advantages we discuss with our medical clients.

  1. Real Estate can be a good investment as the value is generally expected to rise with inflation in the future.
  2. When a physician or medical group buys a medical condo or office building to house their practice, they will be paying rent to themselves instead of an outside landlord.    Also, it will allow the physician the ability to modify the space in the future to handle practice expansion or alteration of the facility to handle future needs.
  3. Many banks offer commercial real estate financing making obtaining funds available to purchase the facility.
  4. The physician or medical group can deduct the following expenses:
  • Mortgage interest paid on the medical office building.
  • Depreciation of the building.  Generally, businesses capitalize the entire cost and depreciate the building over a life of 39 years. However, a cost segregation study can be done, and certain capitalized items may be depreciated over a shorter life which may result in a reduction in taxes.
  • Repairs and maintenance expenses on the building.
  • Property taxes on the building.

If the physician or medical group plans to sell the practice in the future, the building may either be sold at the current market rate to the buyers or rented to the buyer.

Tax planning is necessary before a physician or medical group invests in real estate to insure maximum tax benefits.

If you have any questions, please feel free to call Gregory Lewis, CPA at 714-569-1000.