Buyer Agent's commission and tax write off

[Saika Maeda]

Hi all, 

I'm about to place an offer on a property with an ADU, which we plan to rent it out.

I understand that if I rent this ADU out, then I can have a tax write off on the mortgage payment and insurance payment for the the ADU's sqft portion. Does that same logic apply to "buyer agent commission"? My question is; is it better to not ask the seller to pay for the buyer agent's commission (not include it in the offer letter) so that I pay it by myself and get a tax write off on this commission expense for the ADU's sqft portion? I have a choice to ask the seller to pay for my buyer agent's commission or not include it in the offer letter (pay by myself), so I wanted to know before I submit the offer.

Thank you! 

[Joshua Thompson]

Great question! Based on the purchase price, closing cost, agent fees and certain other items you will calculate (capitalize) a total number. A percentage of this number is then used to determine what portion is related to the ADU vs the portion of the property you're using personally. This will determine the depreciation amount. Typically it's better to have the seller pay the buying agent because that amount if you paid it would still need to be capitalized and won't be expensed entirely in the first year.