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State tax filing
This activity would be reported as a Rental Property and the cost to build the ADU would be recorded as the main asset for depreciation. If there is a possibility of the ADU being sold separately from the primary residence, then you should plat and allocate the land under the ADU to the rental property as well. (Land is not depreciated but does increase your basis in the property a whole.)
Additional Information:
- IRS Pub 527 "Residential Rental Property"
- Where do I enter income and expenses from a rental property?
- What kinds of rental property expenses can I deduct?
- How do I handle capital improvements and depreciation for my rental?
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‎April 22, 2024
6:46 AM