Hello,
In 2020, we built an accessory dwelling unit (ADU) on the same parcel that also has our primary residence. We were an owner-builder for the ADU. The ADU is a separate structure from our primary residence. The ADU also has a separate address from the primary residence; however, it’s on the same parcel. We listed the ADU for rent on May 1, 2020. The ADU was rented on June 1, 2020. The ADU has only been used for rental income (no personal use). We are trying to enter the ADU into turbo tax for depreciation purposes. We entered in the expenses; however, we cannot find where the enter the improvements for the depreciation calculation.
Our current approach is as follows: We added a Rental Property (Sch E) under the wages & income section. We entered in the expenses related to the ADU; however, we cannot find where the enter the improvements (for the depreciation calculation).
When attempting to fill out more information, for the question, “Was this property your residence in the past,” we selected “no.” For the question “Did you purchase this property?”, we tried “No, I acquired it in a different way” and “Yes” but was unable to get to a section to allow entry of construction cost (improvements).
Additional information:
- We receive one tax bill for both structures that are located on the same parcel.
- We paid for the ADU in cash, there is a mortgage for the original purchase of the parcel.
- All utilities are metered separately with the exception of water.
- The ADU makes up 30% of the combined square footage.
Any guidance would be much appreciated.
Thank you!
C and P
