For landlords with multiple rental properties

Own 5+ rentals you never did cost segregation on?

Bundle pricing + Form 3115 catch-up. Form 3115 may allow taxpayers to catch up missed depreciation adjustments in the current year without amending prior returns — verify treatment with your CPA.

Engineer-reviewed · IRS Pub 5653 methodology · RSMeans 2026 cost data

The Form 3115 catch-up

If you own rental property that's been placed in service in a prior year and you never did cost segregation, accelerated depreciation that would have been claimed in those prior years is still recoverable. The mechanism is Form 3115 (Application for Change in Accounting Method) filed under automatic-consent procedures in Rev. Proc. 2015-13.

Form 3115 may allow taxpayers to catch up missed depreciation adjustments in the current tax year — without amending prior tax returns. The catch-up is computed as a §481(a) adjustment: the cumulative depreciation that would have been claimed under the engineered MACRS schedule, minus the depreciation actually claimed under the property's default 27.5-year straight-line treatment. The difference is the deduction in the current year.

Every Cost Seg Smart study on a prior-year-placed-in-service property includes the §481(a) workpaper pack: the hypothetical engineered depreciation schedule, the comparison to claimed depreciation, the cumulative difference, and the Form 3115 line-by-line filing reference. Your CPA files the Form 3115 with your tax return.

Verify with your CPA before filing. Form 3115 has specific eligibility requirements, applicable change numbers, and statement attachments. Cost Seg Smart provides the engineering workpapers; tax-return filing and state-conformity analysis stay with your CPA.

Worked example: 11-property landlord, Form 3115 lookback

Anonymized profile representative of typical multi-property landlord engagements. Actual results depend on each property's basis, placed-in-service date, capex history, state conformity, your §469 status, and other facts.

Portfolio

9 single-family rentals + 2 duplexes across Phoenix and Tucson. Placed in service 2019–2023. Combined depreciable basis ~$4.8M. No prior cost segregation; all properties depreciated on the default 27.5-year straight-line.

Engagement

11 engineered cost-seg studies (volume bundle: 15% off retail), each with §481(a) catch-up workpapers, filed as a single Form 3115 with the current-year tax return.

Outcome

Combined §481(a) catch-up adjustment in the current year on the order of $700K–$1.1M (engineered reclassification ~25–35% × cumulative missed depreciation from prior tax years). At REPS or active-participation status, the catch-up can offset non-passive income subject to §469 and at-risk basis rules.

Illustrative only. Outcome ranges depend on actual basis, placed-in-service dates, prior bonus-depreciation rates, capex history, and your specific tax position. Run the property-specific calculator on the homepage for a personalized estimate.

Bundle pricing

Per-study pricing scales by basis band. Volume discount stacks on top: 5% off retail for 2 properties · 10% for 3–4 · 15% for 5–9 · custom proposal for 10+.

Property type Basis band Per-study fee
Single-family / STR / Condo <$300K $495
$300K–$700K $895
$700K–$1M $995
$1M–$2M $1,495
$2M–$3M $1,995
$3M–$4M $2,995
Multifamily 2–4 (Duplex / Triplex / Fourplex) <$300K $795
$300K–$700K $995
$700K–$1M $1,095
$1M–$2M $1,795
$2M–$3M $2,295
$3M–$4M $3,295

Full pricing matrix (higher basis bands, commercial / multifamily 5+, complex case notes) at /pricing/.

Frequently asked

I own X rentals I never studied — can I still do cost seg now?
Yes. Cost segregation can be applied retroactively to any property you currently own that has been placed in service in a prior year. The mechanism is Form 3115 (Application for Change in Accounting Method) under automatic-consent procedures in Rev. Proc. 2015-13. The catch-up depreciation is computed as a §481(a) adjustment — a cumulative figure representing all missed accelerated depreciation from the property's prior tax years, claimed in the current tax year.
Do I have to amend prior tax returns?
No. The §481(a) catch-up adjustment is taken in the current tax year — no amended returns required for prior years. This is the structural advantage of Form 3115 versus filing an amended 1040 / 1040-X for each prior tax year (which would be required for some other depreciation-method changes). Verify treatment with your CPA before filing.
How does the §481(a) catch-up work?
Form 3115 may allow taxpayers to catch up missed depreciation adjustments in the current year without amending prior returns. The computation: (1) build a hypothetical depreciation schedule for the property AS IF the engineering-based reclassification had been applied from the placed-in-service year, (2) compare to the actual depreciation claimed in prior years (typically 27.5-year straight-line for residential), (3) the cumulative difference is the §481(a) adjustment, claimed as a deduction on the current-year return. The engineered Cost Seg Smart study includes the §481(a) computation workpapers. Verify treatment with your CPA before filing.
Do all my properties qualify for the volume bundle?
Yes. The bundle applies across properties of any residential type — single-family rentals, STRs, condos, duplexes, triplexes, fourplexes — at any basis tier. Bundle pricing: 5% off retail per study for 2 properties, 10% for 3–4, 15% for 5–9 properties. Portfolios of 10+ get custom proposal pricing. Per-property work is still done — the discount reflects operational efficiency, not reduced engineering depth.
What if my properties are in different states?
Federal cost segregation methodology is the same regardless of property location — IRS Pub 946, Treasury Reg §1.168, Rev. Proc. 87-56 apply nationwide. State conformity varies: some states (CA, NJ, NY among others) decouple from federal bonus depreciation under §168(k), requiring add-back / subtract treatment on the state return. We document component reclassification on the federal-applicable basis; your CPA applies state adjustments per the state's depreciation conformity table. We do NOT prepare state-specific tax returns or render state-specific tax advice — that's your CPA's lane.
How does this work if I'm a Real Estate Professional under §469?
Real Estate Professional Status (REPS) under IRC §469(c)(7) requires meeting two tests: (1) more than half of your personal services in trades or businesses during the year are in real property trades or businesses, AND (2) you perform more than 750 hours of services in real property trades or businesses. When you qualify, your rental real estate activities are not automatically passive — losses from cost segregation can offset non-passive income (W-2, business income, dividends, etc.) subject to material-participation rules per rental property. REPS qualification is determined annually and substantiated by contemporaneous records (time logs, calendar entries, supporting documentation). The cost segregation study itself is identical regardless of REPS status; how the resulting losses are treated on your return depends on your §469 status and material participation per property.

Estimate your portfolio's catch-up.

Run the calculator on the homepage for a per-property estimate, or order a study to start the §481(a) workpaper pack.