The amount of mortgage interest and real estate taxes that is placed in the rental activity should be prorated. Use the tax statements from the property tax office to figure out the portion that should be allocated to the accessory dwelling unit (ADU). If that is unavailable then take the square feet of the ADU divided by the combined square feet of your residence and the ADU to arrive at the rental percentage.
Do not enter the full amount in both places (Deductions and Credits and rental activity). Once you have figured out the amount for each, then enter the personal portion in Deductions and Credits, and the rental portion under rental expenses.
This percentage should also be used to determine the cost of the ADU for your depreciable asset if you own or are buying the property.
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