Allowable to purchase a primary with a detached ADU, cost seg just the ADU

Tax, SDIRAs & Cost Segregation
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Allowable to purchase a primary with a detached ADU, cost seg just the ADU

William C.
Member since 2021 · 87 posts · 41 votes

Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

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Sean GrahamBusiness Member
Investor , CPA · Detroit, MI · Member since 2016 · 588 posts · 249 votes
1y
Quote from @William C.:

Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

Yes. This is common in California  
Maven Cost Segregation Tax Advisors553 Reviews
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  • Sean GrahamBusiness Member
    Investor , CPA · Detroit, MI · Member since 2016 · 588 posts · 249 votes
    1y
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Maven Cost Segregation Tax Advisors553 Reviews
    WebsiteView Page
    1Reply
  • William C.
    OP
    Member since 2021 · 87 posts · 41 votes
    1y
    Quote from @Sean Graham:
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Thanks for the reply. Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income? This would be via STR loophole, not REP status.
    0Reply
  • Sean GrahamBusiness Member
    Investor , CPA · Detroit, MI · Member since 2016 · 588 posts · 249 votes
    1y
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Thanks for the reply. Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income? This would be via STR loophole, not REP status.
    Yes, absolutely! Here is a podcast episode I recently did with BP on this 
    https://www.biggerpockets.com/blog/rookie-521
    Maven Cost Segregation Tax Advisors553 Reviews
    WebsiteView Page
    0Reply
  • William C.
    OP
    Member since 2021 · 87 posts · 41 votes
    1y
    Quote from @Sean Graham:
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Thanks for the reply. Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income? This would be via STR loophole, not REP status.
    Yes, absolutely! Here is a podcast episode I recently did with BP on this 
    https://www.biggerpockets.com/blog/rookie-521
    Thanks! On it. Going to give this a listen and get back with you.
    1Reply
  • William C.
    OP
    Member since 2021 · 87 posts · 41 votes
    1y
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Thanks for the reply. Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income? This would be via STR loophole, not REP status.
    Yes, absolutely! Here is a podcast episode I recently did with BP on this 
    https://www.biggerpockets.com/blog/rookie-521
    Thanks! On it. Going to give this a listen and get back with you.

    @Sean Graham Thanks for the link to the pod. I listened. You did a great job. Based on the content of the podcast, a primary home w/ a detached or attached ADU would be similar to the example you provided of the triplex you owned and lived in. Correct?

    0Reply
  • Sean GrahamBusiness Member
    Investor , CPA · Detroit, MI · Member since 2016 · 588 posts · 249 votes
    1y
    Quote from @William C.:
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:
    Quote from @Sean Graham:
    Quote from @William C.:

    Wild idea based on a property in my local market. Is it allowed to purchase a property with our primary home that has a detached ADU on the same tax lot. Live in the primary. Rent out the ADU as a STR (7 day stays or less). Perform a cost seg study on JUST the ADU. Anyone out there with experience in a similar situation? Thanks for taking a look.

    Yes. This is common in California  
    Thanks for the reply. Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income? This would be via STR loophole, not REP status.
    Yes, absolutely! Here is a podcast episode I recently did with BP on this 
    https://www.biggerpockets.com/blog/rookie-521
    Thanks! On it. Going to give this a listen and get back with you.

    @Sean Graham Thanks for the link to the pod. I listened. You did a great job. Based on the content of the podcast, a primary home w/ a detached or attached ADU would be similar to the example you provided of the triplex you owned and lived in. Correct?

     Exactly! You got it. 

    Maven Cost Segregation Tax Advisors553 Reviews
    WebsiteView Page
    0Reply
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