@CandP507 wrote:
We entered in the expenses related to the ADU; however, we cannot find where the enter the improvements (for the depreciation calculation).
“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.
Under the rental section, there is a place to enter "Assets" for depreciation. That is where you enter the cost to build it.
I would say you "purchased" it. Building it is pretty much purchasing it.
Except for figuring out how much property tax to allocate towards the rental, there shouldn't be a need to look at the tax bill. Just enter the actual cost you paid to build it, and leave the land as $0.
Be sure you do not enter any mortgage interest as an expense for the rental.
The 30% of total square footage should not matter (except for trying to figure out how much property tax to allocate for the rental). You are ONLY enter expenses for the rental, so nothing from your personal home should be factored into what you enter.
