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Investors & landlords
NONE of those are used ... your basis equals the purchase price of the home + cost to buy + improvements.
If you want you can split out the ADU as a separate basis and enter it as such on the Sch E. Then the portion of your home you rent would be a separate Sch E entry.
The common expenses need to be prorated in a reasonable fashion ... by square footage or by occupancy (which is useful for utilities).
For the first year I HIGHLY recommend you seek professional assistance to get this set up correctly due to the mixed use divisions. And/or do some reading : https://www.irs.gov/forms-pubs/about-publication-527
Lastly depreciation is required ... it is NOT optional.
‎August 2, 2021
6:25 PM
3,397 Views