Once you started preparing the property be sold, you would keep records of the improvements to the property as you can add them to its cost to be deducted from the eventual sales proceeds. Carrying costs such as mortgage interest and property taxes however would not be deductible during this time as rental expense but would be available to be deducted as itemized deductions if that would benefit you.
Once the property is no longer rental property, you can only deduct mortgage interest and property taxes as itemized deductions, as opposed to rental expenses.
I don't see either option making the reporting of the sale of the house easier.
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