The Financial Benefits of Owning an Office Condo for Your Medical Practice
3 Advantages of Owning an Office Condo for Your Medical Practice
The financial benefits to owning an office condo for your medical practice may be the best reasons of all.
#3: Financial Benefits: Costs, Principal Paydown and Tax Deductions
Office condos have a proportionately smaller cost as compared to a stand-alone commercial building. In most jurisdictions, the cost to develop commercial real estate can be two to three times more expensive than developing residential properties. It’s not unusual for a commercial water tap fee (the cost / fee to simply obtain the right to tap into the water system serving that area) to cost over one hundred thousand dollars for even a small commercial building. Development costs like this and others can make building a new property very challenging, especially when you only require a few thousand-foot space.
The same financial benefits of owning a traditional building also exist with owning an office condo. The first and most notable is that with every payment you make, your principle is reduced, and your equity and net worth increases. The next benefit is being able to take advantage of additional tax deductions, such as depreciation. Your practice can still write off the entire lease payment made to the entity or LLC you use to own the property, so the practice still gets the same or even higher deductions compared to leasing. Additionally, as the property owner, you also get to depreciate the space / building.
Owning commercial property can be an excellent way to create an additional asset that is driven by the fact you own a practice. Often, the real estate is worth even more than your practice! Many property owners will also retain the property after they sell their practice to create an additional income stream for years or decades after they transition out of medicine.
There are several additional benefits of property ownership; including, eliminating landlord negotiations every five, seven or ten years; along with increased flexibility when it’s time to sell your practice. If you are interested in owning your office space, start by hiring an expert commercial real estate agent who specializes in representing healthcare tenants and buyers and will ensure you understand all your available options. Next, confirm you fully understand the economic advantages and responsibilities that come with property ownership by evaluating a detailed purchase vs. lease or purchase vs. purchase comparison. If the economics make sense and you like the property, an office condo can be an excellent option with many advantages in both the short and long term.
CARR Healthcare is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, thousands of healthcare practices trust CARR to achieve the most favorable terms on their lease and purchase negotiations. CARR’s team of experts assist with start-ups, lease renewals, expansions, relocations, additional offices, purchases, and practice transitions. Healthcare practices choose CARR to save them a substantial amount of time and money; while ensuring their interests are always first. carr.us
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