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Specialized Tax Incentives for the Medical & Health Care Industry

Specialized Tax Incentives for the Medical & Health Care Industry

April 09, 2021
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If you have yet to hear; Local, State, and Federal Governments have been feverishly enacting numerous incentives to help stimulate business economies. Due to the high tax brackets of most medical practitioners, these incentives are now an essential part of the tax planning process. If you haven’t had a thorough review of your qualifications for incentives, keep reading.

How Much Money is Available?

The average available benefit for a small practice with their own building is $160,000.

Who Qualifies?

The following is a list of common qualified practitioners:  

  • Physicians
  • Dentists & Orthodontists
  • Dermatology & Skin Care
  • Vision & Eye Care
  • General Practitioners
  • Surgeons
  • Therapists
  • Medical Imaging

How Do I Qualify?

You may qualify if you meet any of the following: 

  • Own Commercial Property
  • Directly Employ U.S. Staff
  • Pay Real or Personal Property Tax
  • Pay State or Federal Income Tax
  • Perform Energy Efficiency Upgrades
  • Upgraded Equipment Purchases

How Do I Learn More?

If you would like a thorough analysis of incentive dollars available for you, contact us for a Tax Elimination Jump Start Session!

The Medical Industry and Tax Credits

What if you were told that you as a Health Care Provider you could receive funds for medical equipment, devices, computers, furniture, and other office or medical equipment?  You would ask, “How?’.  It is a simple process of taking advantage of tax incentives and credits made available specifically to your industry.

The most immediate reply to this statement is, “If it is that simple, why have I not heard about this before?”.  Simply put, tax incentives and credits are confusing and most CPA’s are unable to fully capture the available incentives and credits for their clients.

Successful health care providers, from individual practices to large entities, are constantly faced with the decision of when and how to invest in their own businesses.  The most important factor being, the total cost of the investment, including the potential tax benefits.

Tax Incentives / Credits Every Medical Facility Owner Should Consider

  • Cost Segregation
  • Section 179 D
  • Property Tax
  • Historical Tax Credits
  • Section 45L Tax Credit
  • R&D Tax Credits
  • Hiring Tax Credits

This is just a short list of possible tax incentives and credits available to Health Care Providers. The easiest way to determine if your organization would qualify for tax incentives or credits is to ask an expert.

Medical Offices Qualify for over $200K in Tax Incentives On Average

Medical offices of all types are excellent candidates for a Cost Segregation study. This is due to the fact that most medical facilities contain extensive amounts of cabinetry and counter-tops throughout their buildings. In addition, most medical facilities have a high number of dedicated electrical and plumbing work supplying both the medical and office equipment. This could include but would not be limited to: water lines, gas lines and compressed air lines. They also normally include extensive data communications systems, intercom systems and sound or video system which ALL qualify for accelerated depreciation. This list does not even touch on outdoor excavation work that would qualify. 

The very best method for identifying qualified property is the use of a cost segregation study provided via an engineer working in conjunction with your CPA to identify and classify all qualified property. 

We have worked with many medical facilities to uncover tax incentives and credits that allowed their offices to expand, hire additional staff and reinvest in their practices. Your facility should be taking advantage of the potential money that is available for you today.

Four Reasons Why Medical Practitioners Should NOT Own Commercial Property

Commercial property can often be a great investment for those in the medical community. Many ponder whether or not to enter the world of property ownership. Others are property owners and have the property tax bills to prove it!

After spending more than a decade in commercial property consulting, we have identified four common reasons why Medical Practitioners should not own commercial property:

1. Too Successful in their Field

Due to the highly specialized training and education necessary to participate in the medical field, most practitioners are solely focused on the business of medicine leaving no time to focus on the business of business. Often those in the medical arena find success and thus fail to focus on the financial components of their practice. Remember, the success of your practice is due to the team you have in place with each member playing his or her part. Likewise, a full team of specialists is required to maximize your investment in commercial real estate.

2. Lack of Tax Knowledge

Have you ever uttered the phrase, “My CPA handles my taxes?” If so, you should not own commercial property.

When it comes to the unique tax issues that revolve around property ownership, you need a diverse financial consulting team in place. Many owners do not have enough information even to choose the correct entity structure for their property. Those in the medical community are highly educated in the specialized areas of their practice however, extremely limited in taxation acumen. To compensate for this, they often blindly trust their CPA representation to handle all financial matters. Unfortunately, CPAs lack expertise in the specialized areas of the tax code as it pertains to commercial property ownership.

If you or your CPA has not aligned yourselves with outside expertise in specialized areas such as: Procurement of Tax Incentives, Accelerated Depreciation, Property Valuation, and Energy Efficiency Incentives – you should not own commercial property.

This leads us into…

3. End Up Paying Way too Much in Taxes

The government has done a reasonable job at providing tax incentives for property owners. The problem; they don’t know how to disseminate information to the beneficiaries. In other words, the government passes a bill and those that were intended to benefit don’t get the memo! Because of this, owners of property end up paying much more than they should in taxes. Additionally, property tax valuations across the nation are completely out of whack due to the recent recession. Properties are simply not worth the amount they are being assessed. If you are not an expert in property valuations and assessments, you either need to find one or stay out of commercial property ownership.

4. Energy Inefficiency

Is the building energy efficient? Will the state or federal government require it to be? How much are the utilities truly going to cost?

Utilities are a bottom line expense and often completely out of the owners’ control. Most in the medical community have no knowledge of how to manage this expense. Even fewer are privy to the conservation products on the market. If you are unfamiliar with terms such as: Energy Metering, Power Factor Correction, Kilowatt-hours (kWh), or Demand Rate; you definitely should not own a commercial property.

In conclusion, property ownership is not for the faint of heart. If you own property or are thinking about jumping into this world, you should consult a firm with expertise in all of the areas listed above to ensure your investment will perform as intended.

If you would like more information on how to maximize your investment through tax strategies and energy conservation products, schedule your free Tax Elimination Jump Start Session today!