For the current tax filing for year 2020, (the ADU is not in service yet in 2020), will I be able to deduct any of these expense?
No. Your total cost from conception to completion will be your cost basis for the ADU and is the amount that will be depreciated over 27.5 years starting on the date you place the ADU "in service" as a rental property.
I read about startup expense, are the startup expense($5000) only deductible IN the first year of service? (in my case that would be year 2021)
Start up expenses are not permitted for SCH E residential rental real estate. That's only for a SCH C business. Your cost of "preparing the property for rent" for that very first tenant are flat out not deductible at all unfortunately. Besides, I seriously doubt you would have any such expenses since this will be new construction. Your biggest issue is going to be dealing with the conversion of the construction loan, to a mortgage loan. I myself am not at all familiar with how to deal with that. All I'm aware of on that front is in IRS publication 936 at https://www.irs.gov/pub/irs-pdf/p936.pdf on page 4 under "Home under construction". But that's for a "qualified home". Since you intend to rent it out from the start, I don't know if that negates it being a qualified home or not.
