A lookback cost segregation study catches up depreciation that was available in prior years but never accelerated. No sale. No refinance. No amended prior-year return — a method change filed on this year's return.
A lookback finds depreciation that could have been accelerated since the property's original placed-in-service date. What that tax value means depends on the property type, the holding period, and the client's broader tax picture.
A Brooklyn Victorian stepped up to fair market value at the date of death. The family keeps the property and converts the tax value into reinvestment capital.
So what: tax value funds the next generation without selling the asset.
A long-term rental held five years, originally listed short-term. The CPA finds missed depreciation before she raises capital for the next STR acquisition.
So what: the existing property funds the down payment on the next one.
A single-family rental placed in service last year. One year of missed accelerated depreciation becomes a current-year deduction and a future tax asset.
So what: tuition gets funded from tax value inside the property, not new debt.
A lookback does not reopen old returns. It compares what the client already depreciated to what they could have depreciated under the corrected method. The difference is filed as a §481(a) adjustment on the current return.
An existing rental already on the depreciation schedule. Any placed-in-service year.
Split the depreciable basis into 5-, 15-, and 27.5-year buckets per the IRS CSATG.
Bonus % follows the original placed-in-service year, not the year the lookback is filed.
The difference lands as a §481(a) adjustment, filed with Form 3115. No amended prior returns.
The dollars change with the property and the client. The equation does not.
Corrected depreciation through today
− Depreciation already claimed
───────────────────────────────────────
= §481(a) catch-up deduction
Once the deduction exists, the property type and client facts decide how it converts to cash. Four case studies show the patterns.
If the rental is passive, the deduction may only offset passive income. The rest carries forward on Form 8582.
See LTR requirements →When average stay is ≤ 7 days and the owner materially participates, the loss can offset ordinary income.
See STR requirements →Cost seg gives demolished components their own basis line. Partial disposition deducts what was removed.
See remodel dispositions →Same mechanics, larger dollars. Engineer documentation, component schedules, and seven-figure deductions.
See the multifamily case →The platform finds lookback candidates across your existing rental book, computes the §481(a) catch-up, shows whether the deduction is usable this year, and ships Form 3115 support with a defensible component audit trail.
Unlevered screens for each before the CPA quotes the client. Catching them in March is expensive.
Enter placed-in-service year, depreciable basis, and reclass profile. The estimator shows the estimated §481(a) catch-up and potential federal tax value.
Run a lookback study, show the catch-up deduction, and give the client a clear savings story with the audit trail behind it.