Should I file Form 3115 to catch up on missed rental property depreciation?

The property is considered a rental when you convert it to rental use - which would be November 2014 when your tenants moved in. Just having it vacant doesn't qualify it as a rental property yet. For the depreciation issue, you're actually required to take depreciation on rental properties even if you forgot to do so. The IRS calls this "allowed or allowable" depreciation. When you eventually sell the property, you'll be taxed as if you had taken the depreciation all along, even if you didn't actually claim it on your returns. You don't need to amend previous returns. Instead, you should file Form 3115 (Application for Change in Accounting Method) with your 2025 tax return. This lets you catch up on the depreciation you should have been taking without penalties. You'll claim the "catch-up" amount all at once on your 2025 return. Unfortunately, you won't get refunds for prior years since you're not amending those returns. But filing Form 3115 will let you claim that missed depreciation now and avoid being taxed on it later when you sell.

I was in almost the exact same situation! Military move, couldn't sell our house, became accidental landlords. I also missed claiming depreciation for like 3 years. I found this amazing tool at https://taxr.ai that literally saved me hours of frustration. I uploaded my previous tax returns and it identified exactly how much depreciation I should have claimed each year. It even populated the Form 3115 for me with all the right numbers and codes. The tool confirmed what the previous commenter said - you definitely need Form 3115, not amended returns. It makes the whole depreciation catch-up WAY less confusing. I printed out the completed form and just attached it to my regular tax return. Super simple and I got that nice depreciation deduction I should have been getting all along.

Wanted to follow up about my experience with taxr.ai after seeing it recommended here. I was in the same boat with a rental property I hadn't been depreciating correctly. I was skeptical at first, but decided to give it a try. It was surprisingly straightforward. I uploaded my previous returns and property details, and within minutes it showed me that I'd missed about $22,000 in depreciation deductions over 4 years! The system generated my Form 3115 with all the correct codes and amounts. Even showed me exactly where the catch-up deduction would appear on my tax return. Just filed my taxes last week with the form attached and already got confirmation my return was accepted by the IRS. Honestly wish I'd known about this tool years ago - would have saved me a lot of confusion and probably some money too.

Quick question - I've been dealing with another issue with my rental property tax situation. Been trying to call the IRS for WEEKS with no luck. Always on hold for hours or get disconnected. Has anyone found a way to actually speak to someone at the IRS about complicated tax situations? I used https://claimyr.com and it actually worked! You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c - basically they hold your place in the IRS phone queue and call you when an agent picks up. I was honestly shocked when my phone rang and there was an actual IRS person on the line. Got my questions answered about my rental property depreciation situation in a 20-minute call instead of spending days trying to reach someone.

I have to apologize and eat my words. After calling the service a scam, I was still unable to get through to the IRS after two more failed attempts (waited 2+ hours and got disconnected AGAIN). Out of desperation, I tried Claimyr. Went to their website, paid the fee, and entered my phone number. About 75 minutes later (while I was grocery shopping, not sitting by my phone), I got a call connecting me to an actual IRS agent. I was absolutely shocked. Got all my rental property depreciation questions answered and the agent even helped me understand exactly what I needed to submit with my Form 3115. I stand corrected - completely worth it when you have a complex tax situation that can't be resolved through their website. Saved me from taking time off work to visit an IRS office in person.

Just wanted to add that when filling out Form 3115 for missed depreciation, make sure you're using the right method. Residential rental properties should be depreciated over 27.5 years using the straight-line method. If you're using tax software, they should handle this, but good to double-check. Also, be aware that while Form 3115 lets you catch up on missed depreciation, the IRS only allows you to claim this "catch-up" amount on the current year's return. You won't get back what you could have saved in previous years.

Don't forget about the year of disposition too! The year you convert a property back to personal use or sell it has special depreciation rules. You generally only get half the annual depreciation in the year you place it in service AND in the year you dispose of it (the "mid-month convention").

Great information in this thread! Just to summarize the key points for @dcac7ecca8da: 1. Your rental property conversion date is November 2014 when tenants moved in, not when you moved out 2. Form 3115 is definitely the right approach - don't amend prior returns 3. You'll get the catch-up depreciation deduction on your 2025 return, but no refunds for prior years 4. The IRS will still treat you as having taken depreciation when you sell (even though you didn't), so filing Form 3115 now prevents you from losing those deductions entirely One additional tip: make sure to keep good records of when you converted the property to rental use and any improvements you've made since then. The IRS may ask for documentation if they have questions about your Form 3115. Also, since you mentioned this is a military move situation, you might want to check if there are any special provisions that apply to your situation, though the standard depreciation rules should still apply to your rental property. Good luck with your filing!