If you own rental property and never did a cost segregation study, you're not stuck — IRS Form 3115 (Application for Change in Accounting Method) lets you claim every dollar of accelerated depreciation you missed in prior years, all on your current-year return.
How it works
You file Form 3115 with your tax return, electing a change in accounting method for depreciation (typically Designated Change Number 7). The cumulative missed depreciation from all prior years is computed as a Section 481(a) adjustment and claimed as a one-time deduction. There's no need to amend prior returns.
Who qualifies
Any rental property owner who has owned the property for 2+ years and hasn't previously done a cost segregation study. The longer you've owned without it, the larger the catch-up.
What we provide
Every Cost Seg Smart study includes the depreciation schedule and component-level analysis your CPA needs to file Form 3115. We don't file the form for you — that's a tax-prep activity — but the schedule we produce slots directly into the §481(a) adjustment your CPA computes.
Common scenario
Property bought in 2022 for $620K, no cost-seg done. A 2026 lookback study identifies $128,000 in 5/7/15-yr property. The cumulative missed accelerated depreciation across 2022-2025 ≈ $96,000, claimed in full on the 2026 return as a §481(a) adjustment. At a 37% bracket, that's a $35,500 cash benefit — most of which would otherwise be lost.