October 15 Cost Segregation Deadline for 2025 Returns

If you filed Form 4868 and extended your 2025 tax return, the clock runs out on October 15, 2026. That is the final extended filing deadline for your 2025 Form 1040, and it is the last day you can put a cost segregation study on that return and claim 100% bonus depreciation on property placed in service in 2025. Miss it, and the deduction doesn't disappear — but it gets more expensive and more complicated to recover.

Which returns does the October 15 deadline cover?

October 15, 2026 is the extended due date for calendar-year individual returns (Form 1040) and C-corporation returns (Form 1120) where an extension was filed. If you hold rental property in a partnership or S-corporation, note that those extended returns were already due September 15, 2026 — if yours went out without a study, skip to the look-back section below.

One clarification that trips people up: the extension gave you more time to file, not more time to pay. Any 2025 tax you owed but didn't pay by April 15, 2026 has been accruing interest and the failure-to-pay penalty ever since. The October 15 deadline is only about getting the paperwork — and the deductions — right.

What "getting it on the return" actually requires

A cost segregation study doesn't need to be filed with the IRS as a separate form. Your preparer needs the completed engineering report before finalizing the return, because the reclassified asset lives (5-year, 7-year, 15-year) determine the depreciation schedule on Form 4562. If the return goes out on October 15 with straight-line 27.5-year depreciation on everything, the study's benefit for 2025 isn't on that return — you'd have to recover it later through a look-back study and an accounting method change.

So the practical deadline is earlier than October 15: the study must be commissioned, the site work completed, and the report delivered in time for your preparer to incorporate it. If you haven't started, start this week.

The 100% bonus math for property placed in service in 2025

Under the OBBBA legislation (IRS Notice 2026-11), bonus depreciation is permanently restored to 100% for qualifying property. For the 2025 tax year specifically, the rate depends on when the property was acquired:

That distinction matters because 2025 is a transition year — the first year of the restored 100% regime. Property you bought and placed in service this year gets the full write-off on every reclassified short-life component. For a deeper breakdown of how the restored bonus works, see our guide to 100% bonus depreciation in 2026.

A worked example: $800K rental placed in service in 2025

Say you bought a residential rental for $800,000 and placed it in service in June 2025. Land is worth $160,000, leaving a $640,000 depreciable building basis. A cost segregation study reclassifies $150,000 to 5-year personal property and $30,000 to 15-year land improvements. Because the property was acquired after January 19, 2025, both reclassified buckets qualify for 100% bonus depreciation.

That is roughly $173,000 in additional first-year deductions. At a 32% marginal federal rate, that's about $55,000 in year-one tax savings — pulled forward from decades of future deductions into the year you bought the property. The trade-off on exit is depreciation recapture, which taxes the accelerated portion back when you sell — but deducting today and repaying years later is a winning trade on time value alone.

What if you miss October 15?

Missing the deadline is not fatal. If your 2025 return is filed without the study, you can still commission a look-back cost segregation study and claim the missed depreciation through Form 3115 (Application for Change in Accounting Method). The catch-up deduction lands on a later return as a Section 481(a) adjustment — no amended return needed. Our full walkthrough covers the look-back study mechanics and a worked $131.5K example.

But there are real costs to the detour:

• A year of lost time value. The deduction you could have taken on your 2025 return instead arrives a year or more later.
• Extra preparer fees. A Form 3115 filing and the 481(a) computation add professional cost on top of the study itself.
• Audit surface. A standalone 3115 filing draws its own line of IRS attention; getting the depreciation right on the original return is cleaner.

The deadline version of this decision is simple: doing the study now is cheaper than recovering it later.

Your pre-October 15 checklist

Confirm your extension status. If you filed Form 4868 (or your preparer did), your deadline is October 15, 2026. If you never filed an extension, your return was due April 15 — file now regardless, and use the look-back path for the study.

Gather placed-in-service documentation. Closing statements, settlement docs, and any renovation invoices for property put in service during 2025.

Commission the study immediately. The report must be in your preparer's hands before they finalize the return.

Confirm the bonus rate for each property. Acquired after January 19, 2025 → 100%; binding contract on or before that date → 40% for 2025.

Model the exit. Run the recapture math alongside the first-year savings so the strategy is a decision, not a surprise.

October 15 is ten days away as of this writing. The investors who capture the full 2025 benefit are the ones whose studies are already underway — not the ones still deciding in the second week of October.

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ROOM42 prepares engineering-based cost segregation studies for residential and commercial investors. Get your free property analysis and see what October 15 is worth to your 2025 return.