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Level 3
posted Mar 24, 2022 8:36:16 PM

Writing off an ADU and an add-on at a rental property

I am building a detached ADU (accessory dwelling unit) and an attached add-on to my rental property that I'm not living at. I have been filing my rental income on a schedule E.

 

1. How should I depreciate this on the Schedule E? I'm assuming it's going to fall under:  "Assets / Depreciation" -> "Rental real estate property" -> "Land improvements" ? 

 

2. And if prompted to write off the entire amount using the special depreciation, I am allowed to, yes?

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1 Replies
Expert Alumni
Mar 25, 2022 4:31:02 AM

1. How should I depreciate this on the Schedule E? I'm assuming it's going to fall under:  "Assets / Depreciation" -> "Rental real estate property" -> "Land improvements" ? No, this is not a land improvement, it is a building. Choose Residential Real Estate.

 

2. And if prompted to write off the entire amount using the special depreciation, I am allowed to, yes. No, this is depreciated over 27.5 years.