Think you had to do a cost segregation study the same year you bought your rental property? Think again, a “look-back” study lets investors capture those tax benefits years later, even if you closed the deal in 2021 or earlier. The real surprise: you don’t lose the depreciation you skipped in prior years, you get to claim it all at once through a one-time catch-up deduction, and you don’t even need to amend old tax returns. Instead, a simple IRS form handles the correction on your current-year filing.
This piece breaks down exactly how look-back studies work, when they’re worth pursuing (hint: bigger properties with more reclassifiable components see the biggest payoff), and what to look for in a firm before you commit. If you’re sitting on a property and assumed you missed the depreciation window, this is worth a read before you leave money on the table.