I'm too lazy to re-read the whole thread and catch up, but one thought occurred to me that there might be some confusion over the term "improvement."
In one sense, improvement means anything done to real property that becomes a permanent part of that real property. Remember that "real property" means real estate or land, only. An "improvement" to real property includes anything you do to the land to add value, including building a structure, installing water and sewer lines, or landscaping. (In contrast, parking a mobile home on your property is not an improvement because it is not permanently attached to the real property, although the water and sewer hookups are property improvements.) So one sense of the question "Is your real property improved" is asking, "what is the value of the stuff that has been built on or is attached to the land?" And an "unimproved lot" might have been cleared and surveyed for a building, but is still unimproved until something is actually built on it.
Another sense of improvement, of course, means new things you did to the property after you bought it to add value. Here, "betterment" might be a less ambiguous word. So in one sense, adding a deck to your house is an improvement to the house and also a betterment, while in another sense, the entire house is an improvement installed on the real property (the land).
So when you first enter property for depreciation as a rental or other commercial use, the question "what is the value of the improvements" is asking for the value of everything permanently attached to the land, which becomes the basis of depreciation, regardless of whether it was recently "improved" in the sense of a betterment.
Does that help?
