Medical Practice Management
Nov 21

Protect physician current real estate holdings

To protect your real estate holdings, you should revise your arrangements now and bring all practice owner-physicians into the real estate ownership, if possible. Meanwhile, establish a few safeguards to prevent some sticky situations. First, ensure that the owning partners offer fair rent value to the practice entity (and thus to the doctors who own the practice but not the real estate).

Even if the building owners feel the rent they charge is fair and competitive, non-owners often perceive otherwise. Obtain an unbiased appraisal, perhaps by averaging values from appraisers chosen by each respective group and an unbiased third party.

Your location may hold great value for the continued success of your practice. If the building owner(s) retires, dies, or decides to sell the building, the practice could face serious harm. Non-real estate owner physicians should require a provision in their documents that the ongoing practice can continue to rent the building for at least one year after the owner’s death or departure.

Also provide that the non-owners hold first option to purchase the property upon any such event or decision to sell. Again, use several appraisers to determine a fair selling price.

This nugget was adapted from Paying Partners: Buy-In, Pay-Out and Income Division Strategies, from Advisory Publications, a division of HCPro, Inc. To order, click here or call our Customer Service Department at 800/650-6787 for more information.

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About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →