I will have an almost identical situation to johnjames in 2023 and appreciate the three of you who have replied on this issue. So I am clear though, I have two questions:
1) Are improvements made in the same year of the sale, after the renter has moved out, added to cost basis as undepreciated, 100% of the dollar amount of the improvement, and
2) Are expenses under $10,000 or 2% of original basis, whichever is less, deducted as sales expenses just like real estate broker commissions or as repair expenses on Schedule E, even if the renter has already moved out?
And if so, isn't the effect the same, i.e. reduces my capital gain regardless of where I enter them? Just seems like a complicated way to do it if they both have the same tax effect.
