Amended returns resulting from miscalculating property basis

[Joe J.]

I've been filing my tax return through H&R block software for a long time now.  I purchased a rental back in the middle of 2012 and have just now realized that my property basis I inputted into the H&R block software is incorrect.  I embarrassingly made the incorrect assumption that the software would automatically compute an assumed improvement ratio when in fact, that is something I should have correctly inputted.  So basically I put in the purchase price as the basis, rather than a % based on a document like my prop tax assessment.  The difference is pretty substantial and I am planning on correcting the past 5 years of returns and submitting the amended returns to the IRS.

I have not received any additional deduction to ordinary income during this time as I do not qualify (joint income is > $150k).  I believe this error has only impacted my carry forward loss balance as I expect to still operate at a paper loss even with the reduced depreciation deduction.  I think my carry forward loss will just be cut in half (based on my rough estimates).

I wanted to throw this scenario out to see what I should anticipate.  I was planning on calling the IRS and telling them my situation and confirming what exactly I need to submit and how I should submit it (I was thinking physical copies of all amended returns via certified mail).  Should I also anticipate any kind of penalty or additional audit?  Any help would be greatly appreciated.  Thanks!