Mark Kohler explains when you can write off a pool built with an accessory dwelling unit. If the pool is exclusive to the ADU, you can depreciate 100% of it; if shared with the main house, only a proportional share. Deductions sit in a passive-loss bucket and stay suspended until you sell the property.
Chapters
If I build a accessory dwelling unit on my property and also a pool, can I write the pool off? If the ADU has access to it,
a portion of it. So you own a home and you're going to build this little rental property off on the side. You get to depreciate the home and everything you put into it. I don't know if you're going to short term rental it or long term rental it. That's going to be a big factor. Now if you put in a swimming pool for the ADU that only the ADU gets to use, you cannot use it at all, then you can write off 100% of the pool. But if you're going to share that pool with the tenants in the ADU, fair enough, maybe we'll write off 50% of it. The issue here is, let's say you write it all off, does that mean you get to take a loss against your other income? Is it a long term rental? Are you a real estate professional? Is it a short term rental? No, they're long term tenants. Are you renting it to your business to run your business? Is it a self rental? There's a good chance. All those write offs are great, but they're going to go into a bucket and they're going to stay there until you sell your house. Now you're going to wipe out the rental income. You won't pay tax on the rental income. It'll be tax free rental income. But don't think you're going to get a big ass write off that you can use against your other income. You got to meet one of those three tests. That's the lies that are out there.
