If you have extra yard space and want to earn extra money, then you may want to consider building and renting out an ADU or an additional dwelling unit.

The Benefits

Not only is this simpler than buying a new separate investment property, but it's cheaper too!

There are also potential tax benefits to renting out an ADU. For instance, some states and cities offer specific tax incentives for adding an ADU to your property.

Reminders

Keep good records of everything you spend on the building project. Even once the unit is rented, you'll want to record all expenses. This would include advertising costs and utilities.

Letting your accountant know ahead of time that you plan on building an ADU allows them to help you strategize and avoid financial pitfalls.

Keep in mind that you'll have to look in to the local codes and building requirements when budgeting for your ADU project. These sometimes limit how much space the unit can use, how close to the street it can be, and how high it can be built.

If you want to maximize the tax deductions of your ADU, click here to schedule an appointment with one of Gold Standard's seasoned tax accountants.

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