So it sounds like there is not a way to have improvements made prior to renting my home factor into the basis of my home I sold?
Sure you can. However, you did not depreciate those improvements that were done prior to renting the property, as required by law. That's the problem, and that's what you need to fix. Failure to do so will at some time in the future come back to bite you. After you've sold the property and reported the sale, the last thing you want is that ghost popping up a few years after when you "think" that property is done and gone from any cencerns you may have with it.
