Thanks for all the info Carl. For clarification:
- I don't have to bother with allocating insurance and property tax deductions between two separate rentals. (Assuming you have one policy for the entire property, and did not take out a separate policy for the ADU)
I have two separate insurance policies, one for the house, one for the ADU. Not sure if this matters, as there are two separate leases, with two different tenants.
- I'd just add the ADU as an additional asset to the existing rental, classified as residential rental real estate depreciated over 27.5 years. For that asset in the COST box I'd enter the amount I actually paid for that structure.
So I would enter the grand total of the ADU in the cost box? And not depreciate the smaller items themselves within it, such as the stove, fridge, etc.?
This is in California by the way, if that means anything. Thanks in advance.
