There is a clear difference between property improvements, and other types of rental expenses. The line is "VERY" clear.
Property improvement. To be classified as a property improvement, two criteria must be met.
1) The improvement must become "a physical part of" the property. This would without doubt include everything you did with the bathroom floor.
2) The improvement must add "real" value to the property. In other words, when appraised by a qualified, licensed property appraiser they will appraise the property at a higher value with the improvement, than they would have without it.
So property improvements add value to the property, regardless of the status of the property at the time of the improvement. So it does not matter if the property was personal use or rental use at the time of the improvement. It *STILL* adds "REAL" value to the property.
Property improvements are capitalized and depreciated over time with depreciation starting on the date it was placed in service, which could be months or even years after the work was actually done and paid for.
Rental expenses are only deductible if incurred while the property was classified as a rental. Expenses incurred while the property was not classified as a rental are just flat out not deductible; not one single penny.
