Medical Office Building Tax Appeals

Often, yes — and usually unfairly. Assessors frequently apply a premium to on-campus or hospital-affiliated medical offices because recent transaction data shows lower cap rates for those assets. But affiliation cuts both ways: lease rates may be tightly bound to a master ground lease or hospital pass-through arrangement, transfer restrictions can shrink the buyer pool, and tenant credit may be concentrated in a single health system. Our team uses healthcare-real- estate transaction sources rather than generic office comparables, and we adjust the cap rate to reflect both the affiliation premium and the marketability constraints. Background on cap rate selection lives in our cap rate and property taxes resource.

Medical office build-outs — exam rooms, plumbing for surgical sinks, medical-grade HVAC, lead-lined imaging suites — routinely run $50 to $80 per square foot, far above generic office. When that TI cost is rolled into the building's assessed value via a cost approach, the assessment captures asset value that actually belongs to the tenant under the lease. A proper MOB appeal separates landlord- owned shell from tenant-owned improvements and challenges the cost- approach inputs the assessor used. See our property tax appeal evidence guide for the documentation that supports a TI separation argument, and our NNN lease property tax resource for how the burden flows to physician tenants.

MOB vacancy is rarely a single number. A four-story building can run 92% leased on a stabilized basis while one specialty floor sits at 60% because a practice consolidated, a physician retired, or a tenant got absorbed into a hospital system. Drive-by mass appraisal misses every bit of that. We pull suite-level rent rolls, track downtime per vacancy event, document the carrying cost of re-tenanting medical space (which is slower than office because of the build-out), and present that record at the assessor or tribunal. The result is an appeal grounded in the building's actual occupancy economics, not a market average. Our broader property tax appeal process resource explains how this evidence flows into the filing.

No. Ambulatory surgical centers and imaging facilities have build-outs that are heavier, more specialized, and depreciate faster than a physician-suite MOB — lead shielding, medical-gas plumbing, oxygen and vacuum lines, dedicated OR HVAC, and high electrical loads. A cost-approach assessment that captures replacement-new value without reflecting accelerated functional and economic obsolescence is a common failure mode. We treat each of these as its own sub-class within MOB, draw on healthcare-specific comparable sales, and challenge the depreciation schedule directly. The same special-purpose principles we use here also support our work on nursing and rehab facility appeals and on senior living property tax appeals.

Deadlines drive everything. In Michigan, commercial appeals are filed at the Michigan Tax Tribunal with petitions typically due May 31 (or July 31, depending on classification). In Indiana, Form 130 appeals run through the county Property Tax Assessment Board of Appeals (PTABOA) and, if needed, the Indiana Board of Tax Review. In Ohio, complaints go to the county Board of Revision, generally by March 31 following the tax year. MOB owners with multi-state portfolios miss windows because each state runs on its own clock — we track the calendar across all three so a filing date never determines whether you're over-assessed for another full year. Start with a free review well before the next deadline.

We work on full contingency — no upfront fee, no retainer, no invoice unless we reduce your assessment. Our fee is a percentage of the actual tax savings produced, calculated over the term of the reduction. For physician-owned MOBs structured as REITs or pass- through entities, the appeal savings flow through to ordinary taxable income and qualify for Section 199A treatment where the entity itself qualifies, which compounds the value of every dollar reduced. Full mechanics live in our property tax appeal cost resource, and you can read what our clients say about the engagement before requesting a review.