Refer to the following section of the relevant IRS publication in order to make the distinction between an improvement and a repair. Note that an addition would almost certainly be considered an improvement that must be capitalized.
https://www.irs.gov/publications/p527#en_US_2019_publink1000219015
With respect to losses from rental real estate activities. to the extent losses exceed income from other passive activities, the loss is disallowed.
However, there are exceptions for real estate professionals who materially participate in their rental activities and there is also a $25,000 special (loss) allowance (subject to limitations) if you or your spouse actively participated in the rental activity.
See https://www.irs.gov/publications/p527#en_US_2019_publink1000219124
