We have a two family apartment where we live upstairs and rent out the downstairs unit. In 2024, we began building a new unit in our basement. We had to switch contractors midway, but the project continues apace and will be done within the month. My questions are:
1. How do we write off/depreciate the money spent in 2024 on the schedule E since they are for a unit that is not yet in service?
2. Since a portion of the expense of the basement unit is also for my home office (I run a fine gardening business out of my home and my equipment is stored in another part of the basement that's part of the renovation), how do I address those improvements? I've used the home office deduction in previous years, but this is obviously substantially more money than usual.
3. Once the unit comes into service, do we handle the home interest deduction for the schedule E with two units of different sizes?
Thanks so much everyone.
jeff
