ADU CONVERSION - DETACHED GARAGE

[Jeffrey Suarez]

Looking at converting our detached 3-car garage into a 2-bedroom standalone adu home.  Current 5 bedroom home has its own 2 car garage & carport. 

Bought my home this way with 3 car garage already permitted. 

I am looking to move out of my current home, and rent in orange county.  The idea being that I can either rent the adu or the main home. Keep one of the homes for my personal use when I do come visit and use the rental income to help fund my new place. I work 10 miles from my current home. 

I am potentially making this move to be closer to my kids school(shared custody) and I want to spend more time with them. I currently have them 50% of the time, but am getting pushback from them not wanting to come over as much. They are teens, so this move would only be until they graduate from High school. I love my current home and don't want to sell it.I want to be able to come back to it in a few years. 

From a personal standpoint I spend more time with my teenage children, which has no value on it,....only gray hairs and the joy of watching them become young adults.

I have a vacation home in Arizona(vacation home loan) that I rent out via Airbnb & VRBO and go there about 1 weekend a month. I am already familiar with Landlord duties and the time vampire it is.  With this move I would potentially be travelling between 3 homes, with the wife and kids mainly being where we move to (Orange County). 

 1.  I am looking at this from a Tax standpoint that "if" I sell in a few years I can still claim that I lived there, to claim the 500k profit tax free, or the mortgage deduction. Can I still claim this in my scenario?. 

2. Reached out to my lender USbank to ask if there are any issues with this. I last refi'd about 16 months ago.This is my primary residence.  I did let them know I would still be living part time on the property, and only renting part of the property. I know they are the strictest lender on the planet. Waiting to hear back about what they say.   Any advice here?

3. I am a carpenter by trade, and am CAD savy. I can do drawings myself ,....so the adu build would be a DIY very cost effective. Building is already there, built 20 years ago so its still very up to code as a structure and has its own permited electrical 100 amp panel.  Only interior walls would really need to be built along with plumbing. Permits would be the most expensive.  
 I could probably do this adu for $15-20k with a potential return of $1500 month rent, or rent the main home for $3000+ . This would be a wash if I were to rent a home where I move. Since I work close to this property I could dedicate 1 weekend a month to attend to slumlord duties.  Any advice from anyone with a duplex? Does this lower the rental value? 

From a monetary standpoint I am looking to not increase my tax burden.

I currently operate the arizona vacation property at a loss, could I use this to offset gains on my Riverside home?

Any advice from either a Tax standpoint, Landlord standpoint, or any other general advice?