Cost Segregation  /  Look-Back Studies
Cost Segregation

Bought years ago?
You can still catch up.

A look-back cost segregation study captures the accelerated depreciation you could have taken on a building you already own, all in the current year, without amending a single prior return.

See What You Can Catch Up
The Opportunity

Missed depreciation isn’t lost.

If you bought or built a property in a prior year and depreciated it as one 39- or 27.5-year asset, you’ve been taking far less depreciation than the law allows. A look-back study identifies the components that should have been on 5-, 7-, and 15-year schedules, and lets you claim the entire cumulative difference, in the current tax year.

How It Works

A method change, not an amendment.

Why It’s Better Than Amending

No amended returns. No reopened years.

Amending prior returns is slow, invites scrutiny of closed years, and is limited by the statute of limitations. The Form 3115 method change avoids all of that: you capture years of missed depreciation in one current-year deduction, on a single form, without touching a return you’ve already filed.

Worth Knowing

A few details that matter.

Bonus at the original rate. The catch-up includes any bonus depreciation available in the year the property was placed in service, so an older building captures its era’s bonus rate, plus the accelerated MACRS schedule.
Hold and tax position. Because a catch-up is a large one-time deduction, look-backs are most valuable for owners who will hold the property and can use the deduction, subject to the passive loss rules.
Common Questions

Look-back studies, plainly.

How far back can I go?

There’s no strict limit, the method change lets you capture the full cumulative difference since the property was placed in service, however many years ago that was.

Will this trigger an audit?

A Form 3115 method change is a routine, IRS-sanctioned procedure, not an amendment. An engineering-based study is what keeps the underlying reclassification defensible.

Do I need to have owned it a certain number of years?

No, but the longer it’s been depreciating as one asset, the larger the catch-up tends to be. We estimate it before you commit.

What if I’ve renovated since buying?

Renovations can add to the opportunity, and may also allow a partial disposition deduction for components you removed. We account for both.

Find out what you can catch up this year.

See What You Can Catch Up

This page is general information, not tax or legal advice. Depreciation results depend on the property, the taxpayer’s facts, and applicable law, and are determined through the cost segregation study in coordination with your tax advisor. Novaric does not guarantee deduction amounts or any tax outcome.