Cost Segregation

Overview

What is cost segregation?

Cost segregation is an engineering-based analysis that identifies and quantifies the individual components of a building. These components are then reclassified into shorter-lived asset categories, allowing for accelerated depreciation. This strategy front-loads depreciation expenses to defer taxes and enhance cash flow by leveraging the time value of money.

Why perform cost segregation?

Cost segregation can generate $30,000 to $200,000 in federal tax benefits for every $1 million spent by accelerating depreciation on certain building components. As an IRS-preferred strategy, it maximizes the value of your fixed assets and supports broader asset management goals. The study methodology also provides data that supports additional tax strategies, including those tied to renovations, fit-outs, and energy-efficient upgrades—such as eligibility for 179D deductions. In acquisition scenarios, engineers typically accelerate 15–30% of assets, while in renovations, that figure often increases to 40–80%.

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Which Dental Office Assets Are Commonly Segregated?

Shorter-lived 5-year assets may include:

Dental Chairs
Hydraulic, Medical Vacuum, and Air Piping to Dental Chairs
Medical Gas Installation
Specialty Electric and Wiring
Carpet and Vinyl Flooring
Wallpaper and Window Treatments
Crown Molding and Custom Millwork
Counters and Cabinets
Decorative Lighting
Fire Extinguishers
Security Systems

Shorter-lived land improvements may include:

Landscaping
Paved Parking Lots
Sidewalks
Exterior Decorative and Site Lighting

Dental Suite Fit-Out

Newly constructed fit-out with exam rooms, orthodontic bays, pediatric treatment areas, labs, offices, and waiting room<

Depreciable basis: $1,888,010
Placed-in-Service 12/2022
Engineers moved 32.6% to 5-year personal property, 56.8% to 15-year QIP (Qualified Improvement Property)
First Year Tax Savings: $489,841

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Dental Office: Acquisition

Single-story metal and wood-framed structure housing a single tenant
Exam rooms, patient stations, office space, reception area with lobby
Depreciable basis: $2,400,000
Placed-in-Service 9/2021
Engineers moved 24.8% to 5-year personal property, 23.0% to 15-year land improvements
First Year Tax Savings: $393,958

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Dental Office: Acquisition & Addition

5,000SF addition with full basement level
Offices, exam rooms, labs, waiting room, large meeting/training room, restrooms, paved parking area
Depreciable Basis: $3,494,292
Placed-in-Service 12/2023
Engineers moved 43.4% to 5-year personal property, 5.1% to 15-year land improvements
First Year Tax Savings: $473,876

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Testimonials

What It’s Like Working With EAG Dental Advisors

We pride ourselves on forming close relationships with our doctors and delivering the best client experience possible. Meet some of our clients for yourself and see what they’re saying about being part of the EAG Dental Advisors family.

“EAG has been super attentive month after month and has helped me lower my tax liability substantially…

I’ve been using them for about a year and they will not only break down my numbers monthly but give me an idea of how those numbers stack up against other dentists in my area. This has helped me catch trends I wouldn’t have seen before. An example is my dental supplies expenditure jumped. I thought it was just because the cost of supplies went up with covid. Yes… but mine went up about 30% more than the rest of their practices. I wouldn’t have seen that without their insight. So far, I’m super impressed!”

– Dr. Kyle O’Donnell

“I have always dreaded the lofty task of bookkeeping, paying bills, payroll, watching margins, and keeping tabs on the financial aspects of my business…

I signed on with EAG. Right from the start and they have made my life much easier. They watch EVERY aspect of my business for one very reasonable monthly fee. I always look forward to the quarterly review, with Morgan, where he goes over a detailed report covering every financial aspect of my business. I always know where I stand and never lose sleep about this vitally important component of my business. I couldn’t be happier with EAG.”

– Dr. R. De Rosso

“Super happy with EAG accounting over the past 2 years…

They guided me through my start up dental practice with not only accounting services, but also lots of wisdom from Morgan’s many years of experience. Their reports are informative for a deep dive and graphical for an overall view of how the practice is going. They help benchmark against practices all across the country. Everyone I’ve talked to has always been helpful. The return on investment for their services each month is great. Can’t ask for much more!”

– Dr. Dylan Patrick

“I was first introduced to Morgan and EAG through a friend of mine who trusts this accounting group with his numerous dental practices….

As a doctor looking for my first practice, I’ve found it very hard to find an accountant who would talk me through finding my dental practice and who would show me the same respect as my peers who have more clout than myself (Multiple practice owners). Even though Morgan Hamon is very busy with his much deserved success, he always answers my calls personally and in a timely manner. Morgan and EAG, thank you so much for all the help you have given me. You guys are true legends!”

– Dr. Sean Kerns

“I highly recommend EAG for any dental accounting needs…

I used to be a client of EAG, but I joined a group that has its own accounting team. I appreciated the monthly reports EAG prepared for me. Recently I went through an IRS audit. Cortney quickly responded to all of my questions and sent me the documentation that I needed even though I am no longer a client. Thanks to her help, I was able to get through the audit unscathed.”

– Dr. Trever Keele

“EAG has done a phenomenal job with our personal and business accounting needs…

They really have a pulse on the dental industry and their insight and expertise is extremely helpful and goes well beyond simply preparing profit and loss statements or managing our QuickBooks. We highly value EAGs input as we make strategic decisions in the short, intermediate, and long-term time frames. I would highly recommend EAG for all of your accounting needs. Quite simply, for us, their services are required for us to confidently grow our business.”

– Dr. William Herr

“I would recommend EAG to anyone!

Morgan and his team are responsive, professional, give fantastic advice, and are very organized in their work manner. We are so happy we work with them – thank you EAG!”

– Dr. Lindsay Fabs

“I switched to EAG from another dental specific accounting firm and the difference has been night and day…

The monthly reports are amazing and the onboarding process was effortless and informative. I am totally satisfied.”

– Dr. Benjamin Dunham

“I have been a client for awhile now and I am very pleased with the amount of work, detail and level of knowledgeable folks that work here…

I am given immediate attention to any matter addressed, I am advised and educated as well on what I could or should be doing for my business. Thanks again to Morgan and his fantastic team.”

– Dr. Kyle Daniel

Learn more about EAG Dental Advisors

Set up a no-obligation consultation to discuss how our firm can provide a level of insight and perspective on your dental practice that you have not experienced before.

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Call Us: 303.799.0476

Cost Segregation

What is cost segregation?

Why perform cost segregation?

Which Dental Office Assets Are Commonly Segregated?

Dental Suite Fit-Out

Dental Office: Acquisition

Dental Office: Acquisition & Addition

What It’s Like Working With EAG Dental Advisors

Learn more about EAG Dental Advisors

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