If you're filing a 709, each year stands on its own in terms of the annual exclusion.
If you gave your son the property in one tax year, then you would (or did) file a 709 or that year based on the FMV of the property as of the date of the transfer. If you then paid for improvements on the property in a later year, you would simply calculate the cost of those improvements and file a 709 based on that cost.
