Why Renovation Timing Matters for Healthcare Properties
Healthcare facilities undergo regular renovations driven by technology changes, regulatory updates, and practice evolution. Each renovation creates cost segregation opportunities separate from the original building, and proper timing maximizes tax benefits from these investments.
Bonus depreciation provisions create urgency around study timing. Current bonus depreciation percentages allow immediate expensing of qualifying property, but these percentages are scheduled to decrease. Completing studies before phase-downs captures maximum current-year benefit.
Healthcare renovations often include high percentages of accelerated depreciation property. Medical equipment connections, specialty systems, and clinical finishes typically yield higher acceleration percentages than initial building construction.
Regulatory-driven renovations must be completed on specific timelines. Understanding how renovation schedules interact with tax year-end and bonus depreciation provisions helps optimize overall timing.
When to Conduct Renovation Cost Segregation Studies
Studies should be conducted promptly after renovation completion to capture benefits in the current tax year. Waiting until tax filing deadline approaches may not allow sufficient time for quality engineering analysis.
Phased renovations may warrant multiple studies as each phase completes. Rather than waiting for entire projects to finish, studies of completed phases capture benefits immediately and potentially at higher bonus depreciation percentages.
Major equipment installations often accompany building renovations. Coordinating cost segregation of building improvements with equipment depreciation ensures complete tax planning for the overall project.
Tenant improvement renovations for healthcare tenants should be studied when placed in service. Landlords funding specialty medical buildouts capture accelerated depreciation on those improvements through timely cost segregation.
Planning Renovations for Tax Optimization
Year-end timing affects when depreciation begins. Improvements placed in service before year-end generate current-year deductions, while January completions defer benefits a full year. Expediting late-year completions can accelerate tax benefits.
Construction documentation should be maintained throughout renovation projects. Detailed records of specialty improvements, equipment connections, and clinical finishes support accurate cost segregation when studies are conducted.
Demolition and abandonment of existing improvements may generate current-year losses. When renovations remove prior improvements, the remaining undepreciated basis may be deductible in addition to depreciation on new improvements.
Budget projections should consider tax benefits from renovation cost segregation. Understanding how accelerated depreciation affects after-tax renovation costs informs project planning and investment decisions.
How Goodlane Group Supports Healthcare Renovation Timing
Goodlane Group helps healthcare property owners develop renovation cost segregation strategies aligned with project timelines. We work with you to identify optimal study timing for each project phase.
Our preliminary estimates help you understand potential tax savings from renovation cost segregation before finalizing project budgets. This information supports better investment decisions.
We coordinate between renovation contractors, facility managers, and tax advisors to gather documentation efficiently as work progresses. Organized information collection enables prompt studies after completion.
Beyond individual projects, Goodlane Group helps develop facility-wide renovation and depreciation strategies. For healthcare owners with ongoing capital improvement programs, we help optimize study timing across multiple projects.