ADU Tax advice

[Boaz Shor]

I'm currently house hacking my primary residence SFH by adding an ADU.

I saw that I can get depreciation on the ADU cost and even do cost segregation.

My question is regarding what happens during the sale.

I know about depreciation recapture, usually with a regular rental property I can 1031 to defer the taxes and recapture, but 1031 is not an option for primary residence (as far as I know).

Are there any other options to defer paying taxes when house hacking your primary residence ?

[Ryan Thomson]

I would wait until after you move out to do a cost seg. Look at the numbers, but for my House Hacks in Colorado Springs it wasn't worth it to me to do a Cost Seg study until I moved on to the next one and could take all of that accelerated depreciation instead of just the rental property %. 

Also if you move out of the primary and its been a rental for some time (I think its two years, but you should look that up) its considered a rental and you can do a 1031 Exchange. 

On this topic you should really get advice from your accountant. There is a lot of a nuance and you don't want to mess it up. 

Also unless you are a real estate professional OR you are making a ton of cashflow on your properties, increasing the amount you can depreciate this year is not all that helpful. You probably won't have enough real estate income to use it against. 

[Eric Williams]

Quote from @Boaz Shor:

I'm currently house hacking my primary residence SFH by adding an ADU.

I saw that I can get depreciation on the ADU cost and even do cost segregation.

My question is regarding what happens during the sale.

I know about depreciation recapture, usually with a regular rental property I can 1031 to defer the taxes and recapture, but 1031 is not an option for primary residence (as far as I know).

Are there any other options to defer paying taxes when house hacking your primary residence ?

 I mean if you dispose of your personal residence and it meets the requirements of 121 you can exclude 250,000 of the gain, 500,000 if married filing jointly.