In such a case, expenses are deductible as carrying costs or sales expenses, of one sort or other. But for @radleresq based on what's mentioned in their original post, all the work could be grouped together and it might qualify "borderline" as a property improvement, thus adding to the cost basis of the property. Other costs (taxes, insurance, utilities) would probably qualify as carrying costs, cost incurred preparing for sales, or something of that sort.
