Captial improvements done after the last renter moved out and before the property was sold, are entered in the assets/depreciation section. However, since the capital improvement was "never" place in service, you have to enter it a bit differently so that it does not get depreciated, yet still adds to the cost basis of the property.
What you have to do is classify the improvement as "rental real estate". Then enter the amount you paid for that improvement in the COST box, and the same exact amount in the "COST OF LAND" box. Since land is not depreciated, that will cause the program to "NOT" take any depreciation regardless of what you enter for your "in service" date.
Just make sure you describe the asset for what it really is. Then since the program will "force" you to enter an in service date, just make that date the date of your closing on the sale.
