Last updated: 2026-06-26
Case-study issue
A family-owned retail portfolio had been using straight-line depreciation for years. Six shopping centers were reviewed through engineering-based cost segregation studies, and the work identified more than $18.5 million in catch-up depreciation deductions.
Those deductions were claimed through a current-year accounting-method change rather than amended returns. The family later continued using studies on new acquisitions, with cumulative tax savings approaching $17 million across the relationship.
Why it matters
Long-time owners often assume they missed the window. In many cases, the bigger question is whether prior depreciation can be reviewed through a look-back study and whether Form 3115 can bring missed deductions into the current planning year.
Planning checks for existing owners
- Which properties have never had an engineering-based cost segregation review?
- Are fixed asset schedules still carrying building components in one long-life bucket?
- Were site improvements, tenant improvements, and specialty systems classified correctly?
- Can the CPA use a method-change adjustment without amending old returns?
JPOPE planning lens
Cost segregation is not only an acquisition tool. Existing portfolios can hold substantial trapped depreciation when nobody has reviewed the property file holistically.