Hal_Al
Level 15

Investors & landlords

You need to keep track of your total cost basis (what you paid for the house, plus the cost of improvements, like the remodel).  Do not include repair cost, in the cost basis. 

 

When the time comes, to rent it out, you will prorate your cost based on the size of the rented area, e.g. if the total house  is 1000 Sq. ft and the in-law unit, 300 sq. ft.,  you will depreciate 30 % of the cost basis.  You will not include land value in the depreciable amount