My wife and I bought a house in 2018 in Oakland that had an unpermitted ~600 sqft basement ADU that we have been not renting out and doing construction on to bring to code slowly over the past year with "help" from the city through the permitting process. It looks like we're very close to finishing, but the final inspection and certificate of occupancy may not come until early 2020.
I think I understand, per previous posts, that the below list of items are considered appropriate to deduct, but depending on the date of certificate of occupancy, I'm uncertain if we are able to claim these for 2019 or if there's a different way we can deduct them.
The total accrued costs thus far total ~45k and we expect ~15-20k more by the end.
Land*
* (we can use 600 sqft? It's the entire basement with 1300 sqft of our home above and a total lot size of 4800 sqft)
Labor and materials
Architect's fees
Building permit charges
Payments to contractors
Payments for rental equipment
Inspection fees
Additionally, I think there's a way we can write off a portion of our mortgage based on the percentage of the home is rentable, but I don't think that counts for this year. How would we calculate it for next year? is this based on the square footage percentage of the ADU to the entire home in relation to the mortgage, or the percentage of the ADU to the lot size?
Thanks!
Andrew
