6 Reasons Dentists and Doctors Should Own Their Practice Real Estate Strategically
Sam's List Editorial | 2026-06-23
6 Reasons Dentists and Doctors Should Own Their Practice Real Estate Strategically Most dentists and doctors spend 20 years paying rent to a landlord, then sell the practice and walk away owning nothing but a patient list. The landlord, meanwhile, owns a building that paid itself off using your monthly checks. There's a better version. A solid practice real estate tax strategy lets you own the building, deduct the rent your practice pays, accelerate the depreciation, and keep an asset that outlasts the practice itself. Done right, the real estate often outearns the dentistry. Done wrong, it triggers passive-loss traps and IRS scrutiny. Here's the difference, in six reasons. 1. The practice real estate tax strategy starts with a separate LLC, a clean deduction, and an asset you keep The structure that works is boring on purpose. You form an LLC, the LLC buys (or holds) the building, and your practice signs a lease and pays rent to the LLC. Now two things happen at once. The practice deducts the rent as a business expense, exactly like it deducted rent to an outside landlord. And the rent lands in an entity you own, building equity in an asset you control. This is the core of medical practice building ownership: the operating company and the real estate live in separate boxes. The practice can struggle, change hands, or close. The building doesn't care. It keeps paying you. 2. Cost segregation front-loads the depreciation into the years you actually need it A commercial building normally depreciates over 39 years. That's a slow trickle of deductions, and most of it arrives long after you stop caring. Cost segregation breaks the building into its parts. An engineer-style study reclassifies things like dental cabinetry, specialized plumbing, dedicated electrical, flooring, and parking-lot improvements into 5-, 7-, and 15-year property instead of lumping everything into 39-year real property. Here's why that matters in 2026. Under the One Big Beautiful Bill Act signed in July 2025, 100% bonus depreciation is now permanent for qualified property (generally assets with a recovery period of 20 years or less) acquired after January 19, 2025. So the components a cost segregation study pulls into shorter lives can often be written off in full, up front. The math, illustratively: say a dentist buys a $1.5M building and a cost segregation study reclassifies $400,000 of it into short-life property. With 100% bonus depreciation, that $400,000 can be deductible in year one instead of dribbling out over four decades. At a 37% marginal rate, that's roughly $148,000 of...
