Selling a Dental Practice With Real Estate
Including real estate changes everything about your sale. From valuation to financing to tax implications, understand the full picture.
Practice vs. Real Estate Sales
Selling Practice Only
- Lease transfers to buyer
- Lower sale price
- Faster closing
- Become landlord or sell separately
Selling Practice + Real Estate
- Higher total transaction value
- Buyer needs commercial real estate loan
- Longer closing timeline
- Tax advantages for both parties
Valuation Considerations
Practice Value
Typically 65-75% of collections for practice alone.
Real Estate Value
- Professional appraisal required
- Comparable sales in area
- Replacement cost method
- Income approach (if leased)
Combined Premium
Together often worth 10-15% more than separate sales.
Financing Complications
Buyer's Challenge
- Needs both practice and real estate financing
- Higher down payment required
- More complex underwriting
Solutions
- SBA 504 loan for real estate
- SBA 7(a) for practice
- Owner financing for portion
Tax Implications
Seller Benefits
- Installment sale on real estate portion
- 1031 exchange possibility
- Depreciation recapture considerations
Asset Allocation
| Asset | Tax Treatment |
|---|---|
| Practice goodwill | Capital gains |
| Equipment | Depreciation recapture |
| Real estate | Capital gains, 1031 eligible |
Should You Sell Together?
Sell Together If:
- Buyer wants both
- Market supports combined sale
- You want clean exit
- Tax benefits align
Sell Separately If:
- Buyer only wants practice
- Real estate market is hot
- You want rental income
- Practice sale timeline differs
Bottom Line
Selling practice with real estate can maximize total value but adds complexity. Work with professionals experienced in combined transactions.
Real estate sale questions? Contact DentalBridge.