Are you in the business of renovating rental properties? If so, general expenses you incur would be deductible business expenses in the year they are paid. Improvements would still be treated as capital additions to the property, even if you did this for a living.
Otherwise, expenses incurred before the property is listed as available to be rented can only be capital additions for the property.
Under the IRS rules, a property is improved when it undergoes a "betterment," an "adaptation," or a "restoration." Each of these terms are defined in the IRS rules. In simple terms, any expenditures that improve the property (add to its potential market value) must be capitalized and depreciated. These costs add to the property basis and are entered under the Assets/Depreciation section of Rental Property in TurboTax.
A repair is any expenditure that is not an improvement but instead returns the property to its former condition. If the property is available to be rented (or has a tenant), these costs are entered under Repairs in the Rental Property Expenses section of TurboTax.
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