The easiest way is to break out the improvements by percentage of the original costs, then use that same percentage to allocate the sale price.
It won't matter much how you figure it, as long as it makes sense. All the depreciation will need to be recaptured. The total gain or loss with be the same no matter how you divide it up.
For example, you purchased the house and land for 80,000. Then you added a roof for 20,000.
Land is not depreciated, so you would have had to given that a value when you started the rental. Lets say it was 10,000.
Now allocate the sales price as 10% to land, 70% to building and 20% to the roof.
This can help with gain and loss, but again, ALL THE DEPRECIATION taken (or could have been taken) will be recaptured and taxed as income.
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