Cost Segregation Case Study – Veterinary Treatment Facility

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    • Jan 14, 2025
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Maximize Your Veterinary Treatment Facility’s Tax Strategy

What is Cost Segregation
Cost segregation is an effective tax planning strategy that helps businesses and individuals involved in constructing, purchasing, expanding, or renovating real estate reduce their tax liabilities by accelerating depreciation deductions, which allows for the deferral of both federal and state income taxes.

Veterinary Treatment Facility
For veterinary treatment facilities, this approach can offer significant benefits, much like it does for hospitals. Veterinary offices often include specialized equipment, treatment areas, and custom-built environments, such as surgical rooms, kennels, and exam spaces, that may qualify for accelerated depreciation. By identifying and depreciating these assets over shorter timeframes, veterinary facility owners can lower their tax burden, improve cash flow, and reinvest in their practice. The following case study demonstrates the benefits of accelerated depreciation, highlighting how similar advantages can be realized for veterinary treatment facilities. 

Practical Example

This case study demonstrates the benefits of accelerated depreciation and how similar advantages can be applied to veterinary facilities with complex infrastructure and client-focused amenities. By utilizing this approach, veterinary practices can optimize their depreciation schedule, enhancing tax efficiency.

Building information

○ Building Type 🡪 Veterinary Facility
○ Property Type: 🡪 Commercial
○ Building Size: 🡪 7,185 SF
○ Study Scope: 🡪 Acquisition
○ Condition: 🡪 Good
○ Filling Year: 🡪 2023
○ Date Placed in Service: 🡪 2023
○ Purchase Price less Land or Total Construction Cost: 🡪 $341,368
○ Tax Rate: 🡪 30%
○ Return on Investment Factor: 🡪 8%

Summary of Benefits

○ 25% Additional Tax Deductions in First Year: 🡪 $157,229

○ RNPV Over Remaining Life of Property: 🡪 $45,805

○ Net Present Value (NPV) Over 10 Years: 🡪 $48,597

Building Allocation After Study

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    5 Year Property

    Depreciable Basis: $40,083 at 9%

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    7 Year Property

    Depreciable Basis: $17,179 at 4%

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    15 Year Property

    Depreciable Basis: $34,733 at 8%

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    39 Year Property

    Depreciable Basis: $249,373 at 56%

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    Total

    Depreciable Basis: $341,368 at 100%

Sales Tax Exemptions

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