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kblurple
New Member

Accessory Dwelling Unit Rental

Our property is listed as a single-family home for real estate (mortgage) and county assessor purposes.  We have a detached ADU that we rent out.  Does that mean we rent "part of my home" or a unit in a "multi-unit property".  And does either choice make a difference?
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New Member

Accessory Dwelling Unit Rental

If you use a percentage allocation it is difficult to assign a 100% rental repair in Turbotax.

Enter as a stand alone single family dwelling.

If no separate appraisal separate  total of land value from your total cost. Then calculate total square footage of each that will give you the cost per square footage and then allocate the average to your ADU and find the land area the same way.

Remember the depreciation taken will have to be recaptured when sold, so shoot for a fair adjusted cost of cottage to depreciate as an asset.[land is not depreciated,separate land value]

There is no one specific formula that you should use, but what ever method you do use, be sure to keep careful records and be consistence.

When you find the % of asset cost of the rental then that % will be used to allocated combine expenses that relate to both.[taxes,mortgage interest,and insurance if allowed to be combined,check  with your agent]

This is the IRS guide.

Publication 527, Residential Rental Property (Including Rental of Vacation Homes)

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