@Carl , yes, and this is why I ultimately followed the method you outlined above - in order for the other method to work, you would have to add the cost of the renovation back into the percentage allocated to site improvements (buildings) on the screen where it asks for the breakdown from the property tax bill. I was uncomfortable kludging it together this way, and that's why I followed your method in the end.
Also, yes, I do understand the difference between the depreciation and a deduction, what I meant to imply was that either method (as long as the cost of the renovation is added back in on the property tax bill land/improvements breakdown screen) yields the same figure for business income/loss and thus the same figure for taxable income for the year in question.
