When a syndication or fund owns the real estate, the cost segregation decision belongs to the entity, not the investors. The partnership commissions the study, reports depreciation on its Form 1065, and passes each investor's share through on Schedule K-1 according to the allocations in the operating agreement.
The entity sets the depreciation facts
Bonus depreciation eligibility is locked in at the fund level by 2 dates under IRC section 168(k): when the property was acquired and when it was placed in service. Under the One Big Beautiful Bill Act (July 2025), qualified property acquired after January 19, 2025 gets a permanent 100% bonus rate. Property acquired on or before that date keeps the phase-down: 80% for 2023 placements, 60% for 2024, and 40% for property placed in service in 2025. An individual LP cannot change these facts and cannot elect out of bonus for their slice alone; the election out under IRC 168(k)(7) is made by the partnership, by property class.
The investor sets the loss treatment
What each investor can do with the K-1 loss is governed by IRC section 469 at their own return. A limited partner interest is almost always passive, so a large year 1 depreciation loss offsets passive income from other investments and suspends beyond that, carrying forward until there is passive income to absorb it or the interest is disposed of in full. Real estate professional status under IRC 469(c)(7) rarely rescues a passive LP, because the investor still has to materially participate in the activity itself.
The multi-state layer
Funds routinely hold property across several states. Each property state can require a nonresident filing or include the investor in a composite return, and each state applies its own bonus conformity. A fund property in a decoupling state produces a state addback that flows through to investors just like the federal deduction does. Read the state footnotes on the K-1; well-run fund administrators break out the state depreciation adjustments line by line.
Recapture flows through too
When the fund sells, section 1245 recapture on the 5, 7, and 15 year property comes back as ordinary income, and unrecaptured section 1250 gain on the building is taxed at up to 25%. Both arrive on the K-1 in the sale year, so the year 1 benefit and the exit cost land on the same investors unless the investor base turns over between those events.
What GPs and LPs should each check
GPs should run a cost segregation screen before the first tax year closes, since adopting the study late forces a Form 3115 with a section 481(a) catch-up rather than a clean original schedule. LPs should confirm from K-1 footnotes whether a study was done, what bonus rate applied, and what state adjustments exist.
Where Amadae fits
Amadae screens fund properties, models the benefit by investor class, coordinates with an engineering study firm for the study itself, prepares the Form 3115 catch-up when the fund adopts cost segregation after year 1, and prepares and files the fund's federal and state returns. The screen is a modeling estimate, not an engineering study.