§481(a) Catch-Up Calculator — recover the depreciation you didn't take.
If you bought a rental in 2020–2024 and took straight-line depreciation, you missed bonus depreciation on the personal-property and land-improvement components of your basis. The IRS lets you claim the missed amount as a single §481(a) adjustment via Form 3115 in the current tax year — no amended returns required. This calculator estimates that adjustment.
The §481(a) mechanism, briefly.
When you depreciate a rental property using the default 27.5-year (residential) or 39-year (commercial) straight line, you're treating the entire structure as a single asset class. A cost segregation study reclassifies 18–30% of that basis into 5-year personal property and 15-year site improvements — categories that qualify for bonus depreciation under IRC §168(k). On a property acquired in 2020, 2021, 2022, or 2025, that bonus rate is 100%. So the reclassified portion is fully deductible in the year of acquisition.
If you didn't do that analysis in the year of acquisition, you "missed" those accelerated deductions — but you didn't lose them. The IRS treats this as a change in method of accounting for depreciation, which is a routine adjustment, not a mistake. Under Rev. Proc. 2015-13, you file Form 3115 with your current-year return, attach the engineered study, and report the cumulative missed depreciation as a §481(a) adjustment. The entire catch-up is deductible in the current year — you don't amortize it, you don't amend prior returns, you just claim it.
Mechanically: Form 3115 is filed with your current-year return (extensions OK), using Designated Change Number 7 (the automatic consent code for changes in depreciation method). A duplicate copy goes to the IRS service center in Ogden, Utah. The §481(a) adjustment shows up as negative "Other Income" on Schedule E. That's it. The whole filing — once the engineered study exists — takes a CPA about an hour.
Why this isn't an aggressive position.
The §481(a) catch-up isn't a "we found extra deductions you missed" play — it's the IRS's own preferred mechanism for changing how an asset is depreciated, designed precisely so taxpayers don't have to reopen closed years. The total lifetime depreciation on the property is the same either way; only the timing changes. Cost segregation accelerates it, §481(a) collapses the missed acceleration into a single year's deduction. The IRS has been adjudicating this exact play since the 1999 Hospital Corp of America v. Commissioner ruling, and it's been on the automatic-consent list for over a decade.
Questions before you file.
Is the §481(a) catch-up an aggressive tax position?
No. The §481(a) adjustment is the IRS-authorized mechanism for changing your method of accounting for depreciation. Rev. Proc. 2015-13 explicitly permits it via Form 3115 with automatic consent (Designated Change Number 7). Cost segregation studies have been on the IRS's automatic-consent list for over a decade. The Cost Segregation Audit Techniques Guide treats engineered studies as a recognized methodology — so claiming the catch-up by filing Form 3115 is a routine accounting-method change, not an aggressive position.
Do I have to amend my prior tax returns?
No — that's the whole point of §481(a). Instead of amending each prior-year return to recompute depreciation, the entire missed amount is collapsed into a single adjustment on your current-year return. You report it as 'Other Income' (negative) on Schedule E, which reduces your current-year taxable income. The IRS specifically designed this mechanism so investors don't have to reopen multiple closed years.
What's the deadline to file Form 3115?
Form 3115 is filed with your timely-filed current-year return, including extensions. So for the 2026 tax year, that's April 15, 2027 — or October 15, 2027 if you extend. You can file the §481(a) catch-up in any open tax year as long as you still own the property; you don't have to do it in any particular year. But you can only do it once per property — once you've changed the method, the new method is locked in.
Does claiming a §481(a) catch-up trigger an audit?
Not by itself. Form 3115 is a routine accounting-method-change filing — the IRS receives tens of thousands per year. What matters is the supporting documentation: an engineered cost segregation study with component-level detail, MACRS classifications, and a defensible methodology. If you have that (we provide it on every Cost Seg Smart study), the §481(a) adjustment is well-documented and the audit risk is no higher than any other depreciation deduction. If anything, the engineered backup makes this position stronger than a passive straight-line schedule with no analysis behind it.
Ready to claim the catch-up?
Order an engineered cost segregation study — we deliver the PDF and the §481(a) calculation your CPA needs to file Form 3115. Studies start at $495 and turn around in under an hour.