Is There a Tax Deduction for Buying Dental Practice?

I am looking to purchase a practice and the building.  The
appraisal on the building is pending, but assuming it seems fair, I will
purchase both.  I have been approved for 100% financing for the practice
10 yr. term, 5.95% through Wells-Fargo and am applying at another bank as
well to compare.  The building numbers depend on the amount I put

I have enough for over 25% down if I need it, but here is where I need
help. I have already paid income tax on all the money in my savings that I
would be using for the down payment, but the down payment for the building
would be a tax deductible expense.  How can I work this where I can
make the down payment without using after tax dollars or can I pay myself
back the amount I put down for the building without having to pay tax on it
(for example, if I put 50K down for the building with my after tax
savings, can I later pay myself back 50K from the practice without
having to pay tax on that 50K)?

Thanks for any help.  It is greatly appreciated. 

The down payment won’t be
a deduction; the cost of the building will lend itself to deductions for about
39 years, excluding the land that isn’t deductible and a few other costs with
different Tax lives.

Does that help?

It seems then tax-wise it would be smartest to put the least amount possible
down, since that is after tax money.  However, a larger down payment will
lower the interest rate by close to 1%.  Tough decision. 
Yep, tough decision and
it’s a cash flow/cash use decision as well…

The other thing to consider is how you allocate the price to each component,
practice and real estate. Talk to your CPA about which might be more
beneficial, higher practice price or higher real estate price and talk to the
lenders about how that might impact financing.

Sometimes you can get pretty creative when buying both together under the right

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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