Forgot to deduct depreciation for 2020, 2021, 2022, and 2023.

[Michael Kare]

I need advice on catching up on missed depreciation for my rental properties. Here’s my situation:

• I own 3 rental condos purchased in 2017 for $250,000 total.
• I forgot to deduct depreciation for 2020, 2021, 2022, and 2023.
• Annual depreciation should be $9,090 (using MACRS, 27.5-year life) with total missed depreciation: ~$36,360 ($9,090 X 4)
• My total rental income for 2024 is ~$15,000 before depreciation and ~$6,000 after.
• I’m using TaxAct to file my taxes.
• Condos are considered "air lots" with no separate land value allocation.

I’ve completed Form 3115 for a change in accounting method and am trying to make a one-time IRC §481(a) adjustment to catch up on the $36,360 missed depreciation in my 2024 return.

The problem: TaxAct allows me to enter $36,360 as "prior depreciation," in my 2024 tax return, but it only results in $400 of tax savings. This doesn’t seem right given my marginal tax rate and the size of the adjustment.

Questions: How can I properly deduct the full $36,000 catch-up adjustment to maximize my tax savings?

Any advice on handling this situation correctly would be greatly appreciated!