Overview
A 35,000 SF multi-specialty medical office building in Miami. Three-story, multiple tenant practices including surgery center on one floor. 2014 construction. Acquired for $9,000,000 in 2024.
The Cost Seg Smart engineered analysis identifies $1,949,288 in accelerated bucket components (31.2% of the $6,248,700 depreciable basis after a 30.6% land valuation).
What the analysis identifies
The 35,000 SF property carries the component density typical for a multi-specialty medical office. The component inventory pulls the following share into accelerated buckets:
- exam-room casework, clinical workstations, supply storage built into specialty configurations
- medical gas piping (oxygen, vacuum, medical air) and outlets, specialty plumbing (hand-wash, eye-wash, scrub sinks)
- specialty HVAC (HEPA filtration, negative-pressure isolation rooms, dedicated specialty zones)
- dedicated electrical for diagnostic equipment, lead shielding in imaging suites, procedural lighting
- the parking lot, ADA access ramps, porte-cochère canopy, site lighting, branded monument signage
Item-level engineering documentation supports each classification — photographs of mounting details, mechanical schematics for HVAC and plumbing classifications, electrical schedules for dedicated-circuit identification.
Reclass breakdown
| Bucket | Amount | % of basis | MACRS section |
|---|---|---|---|
| 5-year personal property | $1,331,242 | 21.3% | Section 168(e)(3)(B); Section 1245 |
| 7-year specialty | $68,525 | 1.1% | Section 168(e)(3)(C); Section 1245 |
| 15-year land improvements | $549,521 | 8.8% | Section 168(e)(3)(E); Section 1250 |
| 39-year structural | $4,299,412 | 68.8% | Section 168(c); Section 1250 |
| Total depreciable basis | $6,248,700 | 100% |
Land value (excluded from depreciable basis): $2,751,300 (30.6% land allocation, Miami FL market).
Year-1 federal tax savings
Assuming 100% bonus depreciation per the One Big Beautiful Bill Act (OBBBA, 2025), the full accelerated bucket components are deductible in year 1:
- Accelerated bucket total: $1,949,288
- Federal tax savings at 37% top bracket: $721,237
For a passive investor, the deduction creates a passive loss offsetting passive income. For a taxpayer qualifying as a real estate professional under Section 469(c)(7), the deduction offsets active income — including business operating income from non-real-estate sources.
Methodology applied
The engine applied the following parameters:
- Era profile: 2014 build, finish density and component weights calibrated to construction-era patterns
- Geo factor: 0.97 (Miami MSA, metro calibrated)
- Component count: 45 distinct line items in the inventory
- Indirect cost multiplier: 1.25 (standard 25% indirect uplift covering soft costs, contingency)
- PPI multiplier: 1.04 (BLS construction cost index applied from build year to acquisition year)
- QC status: PASS (engineered analysis cleared all 16 quality-control checks)
The land valuation used the statistical source. Properties where the county assessor record is within reliability tolerances may produce a different land allocation; the engineered methodology applies the most defensible source available.
Audit considerations specific to this property
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Medical gas piping: Distribution lines for oxygen, vacuum, and medical air qualify as 5-year personal property when they serve the medical operation. The gas service entrance and meter are 39-year. The piping diagram resolves the split.
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HVAC for clinical spaces: HEPA filtration, negative-pressure isolation rooms, and dedicated specialty-zone HVAC qualify as 5-year. Base building HVAC serving lobby and common areas is 39-year. Engineering documentation traces duct runs.
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Lead shielding in radiology: Lead-lined gypsum, lead doors, and lead window glazing in imaging suites qualify as 5-year personal property serving the medical equipment. The supporting wall structure is 39-year.
Return profile
| Metric | Value |
|---|---|
| Study cost (typical) | $6000–10000 |
| Year-1 federal tax savings (37% bracket, 100% bonus) | $721,237 |
| Year-1 ROI on study fee | 72×–120× |
| Total accelerated depreciation pulled forward | $1,949,288 |
The ROI calculation reflects gross year-1 tax savings against the typical study cost range. Net present value of the strategy depends on hold period (longer holds capture more time value) and recapture treatment at sale.
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