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