I never got to thank you for your detailed response, and I do have a followup question at this point...
So I will be using the Demin Safe Harbor Approach (option 1) above for the new buildings, as it's easier and I use it on the existing building on-site. I'll track each 'building' separately, for basis purposes (although the basis on the new buildings will virtually be 0 I believe, since the entire construction is broken down into segments under 2,500). I'm not quite into the weeds on that yet, as I'm just finishing up my bookkeeping. Note, the buildings could never be sold separately (zoning/utility/local laws), but the existing building can qualify for historic tax credits that relate to basis, so I'm thinking this is still the best approach.
NEW RELATED QUESTION:
I do not believe this affects me if I use the method above, but my construction has lengthened to now span two tax years. Does this affect this approach in any ways? (I believe with traditional depreciation it does, as the buildings are not 'in use' until the end of the project - we always have clients trying to rush certificates of occupancy at the end of the year due to this)
As a quick reminder, the new buildings are being built in the backyard of an existing rental property that has been in service for several years (and remains in service, even during construction).
